Why You Should Be Investing In Index Funds Right Now

Our global economy is taking the worst beating seen in decades. While the coronavirus still continues to spread world wide and take thousands of lives, many businesses, restaurants, airlines, schools and even some government organizations have been shut down in order to slow the spread of this virus. So what does this mean for the stock market?. Being that the market is cheap to buy into at this moment and extremely violatile meaning it can go either way up or down, it's hard to tell how and where you should invest your money.

Where Do I Start?

If you are looking to invest in the stock market you should consider where you are financially and learn the fundamentals of stock market investing. Also, how much you can afford to invest. Like Warren Buffett says " Price is what you pay. Value is what you get." Meaning don't focus on short term investments but instead the value of your investment. When you invest in a stock, you take ownership in a business along with your net earnings. If you are a first time investor you can start with as little as $1 with www.fidelity.com they have a $0 commission for U.S. stock trades. Another great app for first time investors is Robinhood. After you're finish signing up you get one free stock and for every friend you invite you both earn a free stock! You're eligible to receive up to $500 in reward stocks each year.

What Stocks Should I Get?

Deciding on what stocks to get can be a little tough, you would want to have a diverse portfolio so that you're earnings are always going up. A strategy I like to use is the 50-40-10 investment strategy I got from MoneyMorning.com So, 50% of your investment portfolio should be a base builder which are great for beginners.

Vanguard Total Stock Market (VTI) is an index fund that tracks the performance of US Total Stock Market Index. You can start anywhere from $100-$1000 for long term. It holds 10 of the largest holdings (Microsoft, Apple, Amazon, Alphabet Inc. Facebook Inc. Berkshire Hathaway, Jhonson & Jhonson, JPMorgan Chase, Visa and Proctor & Gamble). Instead of buying one of these individually, you get more for your money buying this one index fund.

Your 40% investment should be considered your growth investment. These stocks consist of Microsoft, Nike, and PayPal Holdings. These stocks have multiplied in numbers over the years. PayPal Holdings(PYPL) for example, have a 3yr sales growth rate: 17.87% and earnings growth of 21.87%.

Finally the last 10% which will be your rocket riders. Vanguard Emerging Markets Stock Index(VEIEX). This index holds some of the largest companies in the market. China, South Korea, India, and Brazil make up 65 percent of the portfolio. This index includes Alibaba Group Holdings, China Construction Bank Corp, Housing Development Finance Corp and etc.

I am not a financial advisor, you should always do your own research and do whatever works best for you.