5 Ways to Invest Your Retirement Savings

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3. Pick Up a Stock Fund

So, now that you’ve figured out your appetite for risk, what kind of stocks should you invest in?  A lot of investors prefer simple investments, like index funds which are managed by computers. Index funds imitate performances of specific stocks or bonds. For example, The Vanguard 500 Index Fund imitates the capability of Standard & Poor’s 500 stock index. The key difference is that while index funds are run by computers, making them cheaper, managed funds are operated by their human counterparts.

Despite being experts, the human-ran funds can’t compete with the time element of index funds. It’s as simple as humans take days off, and for computers there is no need. So, more often than not index funds get higher returns than their human-managed competition. Additionally, index fund balances grew in 2014, when millionaire investor Warren Buffet announced that he’d like most of his money put into a stock index when he dies. 83-year old Buffet has a net worth of $66billion and called for 90% of his fortune to be placed into a low-cost S&P 500 index fund.