Index Funds Go Overlooked During Time of Economic Uncertainty
It should come as no surprise that the economy is far from stable these days. With a debt crisis in Europe, turmoil in the Middle East, and a high unemployment rate plaguing the United States, few people and regions are immune from the world’s financial problems. Whether you’re a doctor or a farmer, a toddler or a student taking radiography courses, there’s a good chance that the economic woes are personally affecting you in some way or another.
For most people who are employed, the economic brunt is most felt when it comes to their investments. The stock market has made for a roller coaster ride in recent months, with some of the biggest gains and worst days both coming in the previous year. Overall, amidst all the highs and the lows, the America market looks to end the year with an overall loss. Many investors are stressed from riding this roller coaster and realizing little gain, and want nothing more to do with it.
At the same time, though, most investors realize that markets go up over time and that this one should, too. Even if the gains take decades to realize and are mixed in with days, months, or years of losses, an investor will likely earn more from the market than from a low-interest earning bank account in the long run. With this knowledge in mind, people have looked to distance themselves from the stock market without leaving it altogether. They are buying municipal and Treasury bonds in large numbers. They are putting their money into mutual funds, hoping that it can stay out of sight and mind for decades. But bonds offer low rates of return, especially now when they are more popular, and mutual funds often substantial management fees and overhead charges. What to do?Continued on the next page