Index Investing Basics: Why I Chose This Approach
What is index investing and why it's perfect for beginners
What is Index Investing?
Index investing means buying funds that track a market “index” — a measure of the overall market.
Examples:
- Funds tracking the Nikkei 225 (Japan’s major stock index)
- Funds tracking the S&P 500
- Funds tracking global stocks (like VT or VTWAX)
I personally invest monthly in a global stock index fund.
Why Index Investing?
1. Beats the pros
Over the long term, index funds outperform most actively managed funds. Even professionals struggle to consistently beat the market average.
2. Low fees
Index fund expense ratios are around 0.1% per year. That’s 10x lower than typical actively managed funds at 1-2%.
3. Easy diversification
One fund gives you exposure to thousands of companies worldwide.
4. Minimal thinking required
No need to pick individual stocks. Just set up automatic monthly investments and forget about it.
How to Start
- Open a brokerage account
- Take advantage of tax-advantaged accounts (like NISA in Japan, or IRA/401k in the US)
- Set up automatic monthly investments
- Leave it alone