What’s the best way to invest in stocks without any experience? Start with index funds.

There is no doubt that the stock market is one of the best tools at people’s disposal to build lasting wealth. But the problem for many people is that things seem overly complicated and scary, especially for beginners.

But there’s good news. Even if you are inexperienced, stock market You can still benefit. If you think so, all hope is not lost.

By investing in this top index fund, you’re on the path to improving your financial well-being. Here’s what you need to know:

A proven approach

If you are new to the stock market, I think it is wise to invest all your starting capital. Vanguard 500 Index Fund Admiral Share (VFIAX 0.15%). This is an investment vehicle that tracks the performance of. S&P500is an index of the 500 largest companies in the United States. Investors can gain exposure to a variety of sectors, including popular sectors such as information technology, financials, healthcare, and consumer staples.

Historically, this has been a very lucrative investment method. The Vanguard 500 Index Fund has averaged a 10% annual return over the past 30 years. His $10,000 investment 30 years ago is now worth about $179,000 with dividends reinvested. This is truly amazing.

great warren buffett states that it is best for most people to buy index funds. Not only are the fees extremely low, but it’s also essentially a bet on the continued growth of the American economy and continued innovation and ingenuity.

Compare this strategy to taking the active route and funding a mutual fund manager. The fees for doing this are usually much higher. To add insult to injury, over 10 years, 85% of these funds lagged the S&P 500. This is probably best avoided.

think long term

Buying an index fund seems like a no-brainer. And so it is. However, investors should also remember some important factors to ensure long-term financial success.

Perhaps most importantly, focus on the long term. This means it’s best to time the market and not try to buy on the dip and sell at a higher price. This will do more harm than good to your portfolio, as research shows it’s better to remain fully invested through ups and downs.

In other words, accept volatility As an important part of stock market operations. This way, you will be mentally prepared when the situation worsens and you won’t panic and sell your position.

Remember, owning an index fund means you have indirect ownership of all those businesses. Remember this reality of being a business owner and being in business for the long term.

Moreover, the best part of maintaining this mindset is that it does not unnecessarily interfere with the compound interest benefits that work its magic. This also has the benefit of deferring taxes until you sell the index fund, which will likely be decades away.

If you’re inexperienced, you could do a lot worse than loading up on a Vanguard 500 index fund.