One way of creating lasting wealth for yourself is investing your money. This is where you use it to purchase investment instruments that increase in value over time. This increment can net you a handsome profit and secure your financial future. There are many instruments which you can invest in. They include stocks, bonds, commodities and index funds. Known for their stable performance and assured returns, index funds are a popular investment option for many people around the world. An index fund is a type of mutual fund. It is designed such that it tracks the performance of a specific market index such as the Standard & Poor's 500 Index (S&P 500). After tracking, the fund makes investments for its shareholders according to the stocks reported performance in the index. Many people seek to invest in index funds due to their unique characteristics. Index funds have low costs of operation, hence do not charge high fees to their investors. Moreover, they provide you with a wide exposure to markets all over the world. They also have a low portfolio turnover. This makes them highly attractive investments. Here are 8 index funds that have great growth potential.
iShares Core S&P 500 ETF (IVV)
This is one of the top index funds to invest in for 2017. The iShares Core S&P 500 ETF (IVV) is a large-cap equity. It will only cost you 4% annually for every $10,000 that you invest. This index fund follows the S&P 500. Therefore you can be sure that when you invest in this index fund, you will receive a solid, consistent return on investment. This is because the S&P 500 represents the overall market. As such, this index fund performs just as the entire market would. All investors know that the general performance of the market is positive. Thus, investing in the iShares Core S&P 500 ETF (IVV) can help you to earn some steady returns while paying low fees. This maximizes your returns per investment.
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T. Rowe Price QM U.S. Small-Cap Growth (PRDSX)
This is one of the most unique index funds that you can currently find in the market. The T. Rowe Price QM U.S. Small-Cap Growth (PRDSX) makes use of computerized, quant models. The managers of this index fund pick stocks to invest in based on qualities such as valuation and profitability. The team managing this index fund is immensely patient and can hold a stock for more than 5 years at a time. In addition to that, it has an annual return of 10.1%. This firmly secures it as one of the top performing index funds in the market.
PowerShares Aerospace & Defense Portfolio (PPA)
If you are searching for index funds that are guaranteed to perform well , this is one to invest in. The PowerShares Aerospace & Defense Portfolio (PPA) is an index that is in the defense sector. Moreover, it only costs 6.4% in fees for every $10,000 you invest. This index is definitely bound to excel due to word of the president-elect Donald Trump. He is well known to be pro-defense. According to analysts, defense stocks are bound to perform very well this year. This is because they have already doubled the performance of the S&P 500. The PowerShares Aerospace & Defense Portfolio (PPA) contains stocks of defense companies such as the Boeing Co (NYSE:BA) and the United Technologies Corporation (NYSE:UTX) too. If you are searching for an index fund that is bound to perform well and is diversified, this is the one to invest in.
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SPDR S&P Regional Banking ETF
This is an index fund that is in the banking sector. Since the president elect already made some positive comments about his policies for banks, then this is an index fund that you should have in your investment portfolio. The SPDR S&P Regional Banking ETF contains a wide collection of stocks in the smaller banks all over the nation. The last two months have showed positive performance since investors are now more interested in investing in banking stocks. Moreover, the Federal Reserve has boosted the interest rate. As a result, regional banks are definitely going to have a favorable yield. The SPDR S&P Regional Banking ETF has the stocks of some of the most reliable regional banks. As such, investing in this index fund allows you to benefit from the strength of this particular sector.
The Vanguard Mid-Cap Value Index Fund (VOE)
This is an index fund that contains stock from a wide variety of stocks from midsize companies. As such, this index fund takes a value investing approach to wealth creation. When you invest in Vanguard Mid-Cap Value Index Fund (VOE), you can expect a price to earnings ratio of 17.4. Moreover, it has a return of 7.7% per annum and fee rate of 8% for every $10,000 which you invest in it. This is a great index fund to invest in for 2017.
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iShares Core S&P Mid-Cap ETF (IJH)
This is a mid-cap equity. It will cost you 7% in fees for every $10,000 that you invest. It is normally difficult to beat the stock market and emerge in front. However, this index fund actually does it. It has emerged ahead of the market for years. Mid-cap index funds are referred to as the sweet spot of the market. They are known as such because they have more strong potential for long term growth than large-cap index funds. Moreover, they are more financially stable, have easy access to capital and have more experience in management than small-cap index funds. The iShares Core S&P Mid-Cap ETF (IJH) is an excellent index fund to invest in since it follow the S&P 500 and excels at it.
PowerShares FTSE RAFI U.S. 1500 Small-Mid (PRFZ)
This is one of the top index funds to look out for . It relies on a system of analyzing the cash flow, dividends and sales of the companies whose stock it holds. As such, the PowerShares FTSE RAFI U.S. 1500 Small-Mid (PRFZ) invests based on value and not company size. Majority of the stocks in this fund are those of small companies. As a matter of fact, 40% of its assets are micro-cap companies. These are those which have a value of less than $500 million. This index fund charges 3.9% on every $10,000 which you invest in it. Moreover, in recent times, it has had a return of 8.8% annually. As such, it is a superb index fund to invest in for 2017.
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SPDR S&P Bank ETF (KBE)
One of the top index funds to invest in for 2017 is the SPDR S&P Bank ETF (KBE). It is a banking index fund and costs 3.5% in fees for every $10,000 that you invest. This index has tremendous potential for positive performance due to the words uttered by the president elect Donald Trump. He indicated that one of his economic priorities is creating an environment that is ideal for banks to make money. To cement this opinion, he appointed Steve Mnuchin as the Treasury Department secretary. His appointee also indicated that he would strip some strategic parts of the Dodd-Frank legislation that limits how much banks can get involved in the stock market. He also indicated that the administration thought that regional banks were the engine of economic growth. The SPDR S&P Bank ETF (KBE) has the stocks of more than 60 banks. As such, this index fund will perform very well when the president elect's policies are enacted.
The Important Take Away
It is always a wise decision to invest in the stock market. You can do so by investing in individual stocks on your own. However, you can get a slice of a much bigger pie by investing in index funds. These are collections of particular stocks and allow you to diversify, boost your success and rate of return. The index funds suggested above are some of the best ones for 2017. Invest in them and experience consistent, positive returns over the year.
