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.
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Why Index Funds Work
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Active fund managers, on average, fail to beat the market after fees. Index funds guarantee you receive the market return at minimal cost.
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Getting Started in the UK
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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.
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The Power of Compounding
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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.
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Common Mistakes to Avoid
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Selling during market downturns, chasing performance, and paying too much in fees are the three most common mistakes index fund investors make.
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