The best way to invest your money for the long term is in equities, such as the stock market. Over any given 30 year period, the stock market has never lost money. The past is not a predictor of the future, but that’s a pretty nice trend. So the stock market is definitely the best way to invest your money if you’re looking long-term.
But what should you invest in? Individual stocks are very risky even if you know what you’re doing, so I’d stay away from those having a big part in your portfolio. For my money, index funds are the way to go.
What are index funds? Well, basically they’re like mutual funds, but they just try to track the market. But again, over a 30 year period the market has never lost money, so tracking the market is certainly not a bad thing. Why index funds? Here are some reasons:
1) They usually deliver better returns. That’s right, for the most part actively managed funds perform worse than funds designed to just track the market.
2) The fees are very low. Because the funds are not actively managed, the fees associated with them are not that high. Lower fees = higher returns.
3) Diversification. All of your eggs won’t be in one basket, which is a very good thing when you’re working with money.
So add it all up, and index funds are the best way to invest money for the long-term. The fees are low, the returns are good, and the risk is lower. What’s not to like?