So I was curious about something.. a lot of people said just buy index funds and relax.. and maybe that's what I'll do but I have been researching what the index funds are made up of..
I came across this:...
That looks like a list from a S&P500 fund. If you buy a fund that tracks the value of the 500 biggest American companies, guess what? That fund is made up of the 500 biggest American companies such as Apple, NVidia, Microsoft, Amazon, Meta, Google, Tesla, Berkshire Hathaway, etc.
The point of an index fund is that the vast majority of people do a very bad job picking the right stocks, or if they do happen to pick the right stocks they generally have a bad timing for buying / selling them. People far too often go with emotional reactions to politics, personal beliefs, news cycles, trends such as meme stocks (see the famous tulip mania bubble:
https://en.wikipedia.org/wiki/Tulip_mania), overrating losses while underweighting gains, too much hope for a stock that will get them rich quickly, too many eggs in one basket, etc. With an index fund all that is gone. No need to pick stocks or to time them. If NVidia goes to the moon, guess what, you own it. If Walgreens tanks 65% in a year like it just did, guess what, while you owned it the amount you own is so small that you won't notice. It lets you get around the worst parts of most investor's tendencies.
Also there are plenty of other index funds. Vanguard itself has 354 different funds, although if you filter out similar ones the actual amount is ~80. The S&P500 tracking fund is an important fund, but it is only one of those ~80 funds.
Just like people have a hard time picking one correct stock, they also have a hard time picking just one index fund. You shouldn't put all your money into just one index fund. You should purchase a few of them. There is no "Best" way to do this, but buy a mixture of different types of funds to meet your investment goals for your personal situation. Yes, one fund you purchase should be the S&P500 tracking fund since that is just so important to the world's economy. But, you should also own small companies, value companies, foreign companies, etc. I would start here for examples:
https://www.bogleheads.org/wiki/Lazy_portfolios
I personally follow something quite similar to William Bernstein's high risk portfolio:
https://www.portfolioeinstein.com/w...et-allocation-of-william-bernstein-portfolios