Two Simple Steps to Future Wealth

The Dow Jones Industrial Average's recent one-day drop of 777 points most likely sent more than a few people's hearts into a flutter, if not full-scale panic. Drops like that make people question why they invest in the stock market, and the reaction is usually to run to safer investments; but if you have your personal finances in order and are investing for the long term, such drops in the stock market itself aren't anything to overly worry about (what these plunges mean for the economy is a different story).

When it comes to investing, there is a low-risk, high-return investment strategy that's easy to learn and every family should adopt. Saving and putting your money to work in index funds isn't as sexy as picking a winning stock and it's probably not something that you'll be bragging about to your friends at end-of-the-year parties, but it will provide you with a nice retirement nest egg with little risk because the strategy has a lot more to do with issues that you can control than how the stock market is doing any particular month.

The first step is to realize that you should spend your free time where it will benefit you the most financially. That place is not learning the intricacies of how to pick individual stocks. When you realize that simply duplicating the S&P 500's performance through index funds will put you well ahead of what you could likely achieve on your own or what most fund managers will produce, you have placed yourself in a position to take advantage of the limited time you have to spend on investing.

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