Safe Investment No. 1: Index Funds
Index funds are safe investments that are also aggressive enough to provide strong returns. These funds are a type of mutual fund constructed to match or track the components of a market index, such as the S&P 500.
Paul Ruedi, CEO of Ruedi Wealth Management, Inc., recommended investing in index funds as they offer risk-reducing diversification at a low cost. The hands-off nature of index funds allows operating expenses to remain low. The average index fund fees come in around 0.17 percent, compared to the average 0.75 percent fees on actively managed funds, according to Morningstar.
When considering relative costs and returns of investments you can choose for retirement, index funds steadily outperform their actively managed counterparts. “Index funds allow an advisor to create the most reliable financial plan,” said Ruedi. “Actively managed funds must increase uncertainty by their very nature — they can and usually do underperform.”
Ruedi recommended the Vanguard Total Stock Market (VTSMX) Index Fund for boomers’ equity allocation; it provides a low-cost, safe investment option with a reliable delivery of return.
