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4 hrs agoBefore you invest your money in any company, know the type of bond, stock, or shares that you are buying.
Some people think that there is only a money market where you can buy shares and stocks. But that's a lie.
There are what we call index funds.
Now let me explain in basic language:
What are index funds?
An index fund is a mutual fund that aims to match the performance of a specific market index.
You may be wondering what this means. 🧐 🧐
Let me explain in simple English.
Now, imagine the stock market as a race. Some investors place their money on the fastest runners. But you, as an investor, do not want to lose your money. You decide to place your money on all the racers to ensure that if one athlete underperforms, the others will outperform.
What I want you to know from the above illustration is that when you buy an index fund, you own a tiny piece of many companies at once.
For example, if you buy an index fund from the S&P 500, a company that specializes in trading index funds. You'll have a small piece of ownership in top companies in the world like Coca-Cola, Amazon, Microsoft, Tesla, etc.
Amazing right? 😲😲
Yes, that's how it works. It is one of the safest stocks to invest in as a beginner.
But, you can't get access to it the way you can with mutual funds. I'm not saying that you will not see your money.
What I’m trying to say is that you can't liquidate it with the same simplicity as mutual funds. You can't buy or sell them anytime you want, like normal stocks. You will have to wait until the market closes for that day.
But if you are looking for a long-term investment stock to buy as a beginner, an index fund is the best option for you.
My name is Odunayo Abiodun , a Banking & Finance student and a B2B and B2C finance content writer