Intimidated by the Stock Market? Try Trading Index Funds. Phil Town gives a run-down of where index stocks can benefit and hurt your investments.
By Phil Town
Opinions expressed by Entrepreneur contributors are their own.
In this video, Entrepreneur Network partner Phil Town breaks down the complex nature of investing in index funds.
If you're somone who does not want to learn how to invest, Town says you may choose to buy index stocks. Town describes indexes as surrogates to how well the market is doing, known to many as the Dow Jones Industrial Average, S&P 500 and the Nasdaq.
One of the benefits of buying index stocks is their traditionally low fees. Unfortunately, they can also set up a messy cycle assocaited with valuation. When people buy index stocks, fewer and fewer people are made aware of a stock's real price that is reflective of the market. This suppression of price discovery, or finding the right price for the right value, can result in some strange consequences.
Town mentions this type of investing relies partially on greed, fear and volatility.
To learn more about this style of investing, click play on the video.
Related: What Will Happen to Your Wealth After You Die?
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