What are Index Funds?
Let’s take a step back……
The 'S&P 500 of Crypto'
Let’s understand what the S&P500 is before moving on.
The S&P500 is an Index Fund.
Let’s take another step back and explain what the F*** is an Index fund.
In traditional finance an index fund is a big basket of different stocks that you can buy, and it grows as the market grows.
An ETF is just like an Index Fund except you can trade it like a stock.
The S&P 500 is an index that tracks the stock prices of 500 of the largest companies in the US. These companies are spread out across different industries like technology, healthcare, finance, and entertainment. The idea is that if these companies are doing well, it’s a good sign for the economy.
When the S&P 500 goes up, it means most of these companies are growing and making money. When it goes down, it means that the value of the companies is dropping. Many investors also use the S&P500 as a way to invest in a lot of companies at once, instead of picking just one company to invest in.
When you buy the S&P500 Index fund, you own(become a shareholder)500 of the biggest companies in the United States.
Index funds spread your money across a range of assets, reducing risk as losses from one can be balanced by gains in others. They have lower fees, and research shows they beat actively managed funds over time, making them a simpler and better long-term investment choice with less effort required.
A powerful example is the Famous Warren Buffet bet.
Warren Buffett made a bet in 2008 saying
Over 10 years, a low-cost S&P 500 index fund would outperform a group of actively managed hedge funds.
Buffett believed that most hedge fund managers couldn't consistently beat the market after their high fees, but the S&P 500 index fund, with its low fees, would likely do better.
In the end, after 10 years, the index fund won the bet, proving that keeping things simple, with low-cost, long-term investments, often beats trying to pick individual winners.
Just like the S&P 500 tracks top U.S. companies, BIT10 tracks the top cryptos. Over time, this strategy has beaten most professional investors