Index funds track a market index — such as the FTSE All-Share or the S&P 500 — and charge very low fees. Over long periods, they outperform the majority of actively managed funds.
Why Index Funds Work
Active fund managers, on average, fail to beat the market after fees. Index funds guarantee you receive the market return at minimal cost.
Getting Started in the UK
Open a Stocks and Shares ISA with a low-cost provider (Vanguard, Fidelity or AJ Bell are commonly recommended). Choose a global index fund. Invest regularly regardless of market conditions.
The Power of Compounding
A £500 monthly investment in a global index fund returning 7% annually will grow to approximately £600,000 over 30 years. Start as early as possible.
Common Mistakes to Avoid
Selling during market downturns, chasing performance, and paying too much in fees are the three most common mistakes index fund investors make.
