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The Benefits and Varieties of Index Funds
Index funds and ETFs are often the first choice for new investors due to their simplicity and potential for high returns. Within index funds, there is a wide variety of options, each with different returns and benefits. Index funds offer more diversification, lower expenses, lower taxes, and greater control compared to actively managed funds. Even a half a percent difference in returns can significantly impact long-term savings. On average, actively managed funds yield 2% less than index funds annually, while some may underperform by an even larger margin. As a result, index funds are favored for their consistent performance and are considered a safer investment choice.