What is an Index Fund?

An index fund is a financial instrument that provides exceptional diversity at low cost. It is traded like a stock, except when you buy a stock you purchase shares in one company. When you buy an index fund, you buy all the companies in the index it tracks, all at once, in one simple transaction and your financial returns replicate closely those of the market the index tracks.


History of Index Funds

Index funds were invented by John Bogle, who wrote his senior thesis at Princeton in 1951 on them. Later Bogle started Vanguard, now one of the largest asset managers in the world, with indexing as its core philosophy.

Originally index funds were dubbed "Bogle's Folly" because the financial industry assumed the premise was absurd: that investors tracking an index could do better than those with professional, expensive mutual fund managers.

The financial industry turned out to be wrong. Decades of data now show that Bogle was correct, and by a long shot (1). In those decades, as data piled up in its favor, the idea of index investing moved from a fringe concept to the mainstream. Today more money is being invested in index funds than in active mutual funds.

"Beethoven could tell you how to write a symphony but you can't write a symphony like Beethoven does. You can't copy, with any hope of success, a Beethoven or a Warren Buffett. You can copy Bogle at any moment of time. Just buy index funds."
- John Bogle

Active vs Passive Investing

Unlike most mutual funds, an index fund does not have a fund manager making active decisions about what to buy and sell each day. The job of the people running the index fund is to closely track it's underlying "basket" of securities - that is all. For example, all of the large companies in America. Or all of the publicly traded real estate investment trusts. Because of this, it is called a "passive" investment. Most mutual funds are considered "active" investments because fund managers are deciding what securities to buy and sell.

Index Funds Charge Much Less

Despite the fact that they generally outperform actively managed funds, index funds often charge one-tenth to one-thirtieth the fees of active funds!

"You get what you don't pay for."

- John Bogle, on protecting your savings from fees

Thousands of Index Funds Exist

Unlike Bogle's original fund, index funds don't just track the S&P 500 anymore. There are thousands of index funds, and they track every imaginable sector and country around the world. We will help you differentiate between the various index funds and simplify this universe to a handful of the most appropriate, diverse, and low-cost funds.

How this affects you

Index funds could be one of the most significant inventions of the 20th century for you. Simply buy entire markets at once, minimize your fees in doing so, and compound your results year in and year out. A conservative analysis shows that over a lifetime of work and saving you will transfer 66% of your money to the financial industry if you pay its standard high fees. Index funds free you from this.

Speaking of low fees, let's look into that more...



Please enter a first name.
Please enter a last name.
Please enter an email address.
1000 characters remaining
Please enter a message.
How We Are Different
Low-fee index funds. Transparent & fiduciary financial advisors.
Local Financial Advisor
We are in your community. We are local.
Investment Management
We tailor to each client. Index funds at the core.
Index Funds
Broad market exposure, low expense.
Dan's Corner
Meaningful musings from our founder.
Fiduciary
Your best interests are our priority.
Low Fees
Our fees are among the lowest in the nation.
Financial Planner
Financial advisor optimizes your financial picture.
U.S. Treasury Bonds
Use Treasury Bonds to reduce risk.
Book Recommendations
Here are some of our favorites
Who We Serve
We work with clients nationwide from all financial backgrounds.
When Should I Invest?
Life transitions = important financial decisions.
Retirement: 401k and More
Retiring? Plan the future you want.
IRA Rollovers
401k Rollovers. IRA Rollovers
Active vs. Passive Investing
We believe there is a winner in this debate.
The Investment Process
How we work: low-cost index funds, personalized attention.
Simplicity
Simplicity is the ultimate sophistication.
Investing: What to Focus On
Low-fee index funds. fee-only advisor.
Switching Financial Advisors
Can be uncomfortable, but an important step.
Advisor Recruiting
We attract top-tier talent. Not your usual firm.
Basic Investing
Let's start with Investing 101.
Understanding Your Financial Statement
Let's break it down to basics.
Taxes on Investments
What causes taxes within your investments?
Behavioral Economics
The less emotion, the better.
Timing the Market in 2020
2020 - a case study in the futility of market timing.
How Financial Firms Bill
Fee-based vs. fee-only, and lots more.
Who Supports Indexing?
Bogle, Swensen, Buffett, and others.
Transparency
One click to see our fees.
Mutual Funds vs ETFs
Clarifying the difference.
Does Stock Picking Work?
The research says no.
Countering Arguments Against Index Funds
What happens in a down market?
Annuities
Lots of fees, little clarity.
How Do Mutual Funds Work?
Invest in the basket.
How to Relieve Financial Stress
New client? anxiety is normal.
Financial Terms Glossary
Common investment terms you should know.
Firm Comparison
One Day In July vs the competition.
Retired Investing
Retiring? Let us help.
Accounts We Manage
We manage a wide range of investment account types.
High Net Worth Investors
Preserve and grow your wealth.
Investing an Inheritance
Prioritizing and planning for the future.
Frequently Asked Questions
Good questions, real answers.
Female Investors
Your voice needs to be heard. We are listening.
For the Business Owner
Choosing what's best for your business.
Environmental Investing
Carbon intensity, fossil fuels.

Locations

Vermont

Connecticut

United States

Services

Individuals

401k Plans

Institutions

Environmental

Account Types

Differentiators

Cash Flows

Low Fees

Fiduciary

Dedicated Advisor

Materials

Advisors: Join Us

Careers

Articles on Investing

About the Secure Act

Quarterly Booklets

Resources

Vermont Investment Management

Vermont Retirement Planning

Vermont Wealth Management

Vermont Financial Advisors

Investment Tools

In the Media

Shelburne, VT Financial Advisor

Frank Koster | Josh Kruk | Keith McCarthy

5247 Shelburne Rd, Suite #101

Shelburne, VT 05482

(802) 777-9768

Stowe, VT Finanical Advisor

Available for meetings in Stowe.

Peter Egolf

(802) 999-2321

Burlington, VT Financial Advisor

Hans Smith | Katie Muttitt

Nancy Westbrook | Peter Egolf

77 College Street #3A

Burlington, VT 05401

(802) 503-8280

Darien, CT Financial Advisor

Available for meetings in Darien.

Keith McCarthy

(203) 554-9466


v 2.0.3 | © One Day In July LLC. All Rights Reserved.