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Broad diversity is one of the main benefits of index funds. Investing in an index fund exposes investors to a large variety of equities within that index, distributing risk over several companies as opposed to putting all of their money into one stock. The effect of bad performance by any one firm on the portfolio as a whole is lessened by this diversity.

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Investors who like a simple investing strategy with consistent returns should definitely consider index funds, claims Kenton Crabb. “The simplicity and capacity to closely monitor the market performance of index funds is their beauty,” Crabb says. “The steady growth and cheap costs of index funds make them a compelling option for many investors, especially those focused on long-term goals like retirement planning.”

Investors can effectively and passively participate in the rise of the stock market using index funds. These funds still draw a wide spectrum of investors looking for steady returns over the long term because of their extensive diversification, low costs, and predictable performance. Whether you’ve never invested before or are an experienced investor, Kenton Crabb advises thinking about index funds as the foundation of a well-diversified portfolio.

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