S&P 500 index fund
Perhaps the most popular index fund is the Vanguard index fund that attempts to mirror the returns of the S&P 500. This is a popular investment because it is simple, low cost, and you will be more than diversified from one or two “bad apples”.
The Dow Jones is the most talked about American stock market index in the media, however most educated investors realize that the S&P 500 index is the best American stock market index. The Dow Jones only incorporates 30 of America’s largest companies, the S&P 500 index incorporates 500 of the larger American companies. 500 is a much greater pulse/ read on the market than only 30 stocks. One or two companies can have a huge impact on the Dow Jones index which can distort the data, that is not the case for the S&P 500.
Investing a good portion of your money in an S&P 500 index fund is a very good choice. It is very difficult to beat the market, if you can’t beat them, you might as well join them and get the same returns that the S&P 500 gets. However it is important, especially today, to make sure that you are investing in foreign companies as well. China is increasing its GDP at 9% a year and companies operating in China will benefit both short and long term without a doubt.