Index Funds are mutual funds represent the index at the market. Meanwhile, index is bunch stock of some companies. E.g., Standard & Poor’s Composite (S&P 500) has represent five hundreds firms. Wilshire 5000 is union of New York Stock Exchange (NYSE), American Exchange (Amex) plus some National Association Dealers Automated Quoted (NASDAQ) stocks.

Investor who has limited money may consider index funds. You can invest in one hundred or more companies with limited money. You must provide money over many times to buy one hundred individual stocks.

Index is equally weighted average of all stock. The performance of index is depending on market. They may give you rate of return high. This index may consider as one of your investment portfolios.

Although this investment has good prospectus that does not mean you always get money every month. You must realize that index may go down. Therefore, you must prepare for it. Although this index contains good company but these stock companies may go down too. Stock 100 companies change because demand and economic condition. You can watch in TV that index always move irregular or volatile.

Unfortunately, index usually contains of good stock. Index does not like portfolio that could reduce the risk. Some index contains stock with some correlation (? = 1). E.g., Dow Jones contains about 30 blue chip stocks. Your index will rise when economic growth. When economic bearish your index may go down. On contrary, Index, which contains different type of stocks, could reduce risk. E.g., Wilshire may reduce the risk because contains variety stock.

Buying index Funds is passive strategy. Beginner Investor may try this investment. Investment in Index Funds is easy too. You do not have to work hard for making portfolio. You do not have to analyze companies, economics factor, markets, and stocks.