What Are Index Funds?

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Index funds are generally more diversified than an individual stock for the common investor. Learn about index funds and the SNP 500 with help from a licensed insurance agent in this free video on retirement planning and personal finance.

Part of the Video Series: Retirement Planning
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Video Transcript

Hi, my name is Bill Rae. I'm a licensed agent and I have been in the field for well over twenty years and the question is what are index funds? Good question a nice simple explanation of an index fund, think of it as a basket of stocks. For instance, if I had a thousand dollars that I bought into general electric, I would only have general electric stock and that would rise and fall with general electric. An index fund however would be something more like the SNP five hundred which is the top five hundred companies. So, if I took that same one hundred thousand dollars and bought into the SNP five hundred, in theory I would have two dollars on each one of the five hundred companies. So, the SNP is an index fund. Index funds generally are more diversified than an individual stock for the common investor. My name is Bill Rae and I'm helping you build wealth.

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