Difference between a Mutual Fund and an Index Fund

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Mutual Funds vs. Index Funds New Imperatives for the small individual investor and the general public BY: Allen Jackson Document outline: Introduction How does this issue relate to public finance? What is a mutual fund? What is an index fund? Shortcomings of the mutual fund Why index funds are better long term investments Conclusion Introduction To begin, the stock market has been an arena notorious for its extreme wealth creation. In today's news, the small investor is inundated with information regarding particular countries, individual companies, and future macroeconomic predictions in regards to the stock market. With all this information, the small investor is left hopeless to sift through it all, in hopes of finding the particular asset that can secure retirement, pay for a child's education, or provide a stable life. To the small investor's detriment however, many of them do not have the time, expertise or inclination to study individual companies in hopes of determining which one merits his or her hard earned money. Even more important, the few dollars the investor does have to invest must be invested in a manner that does not lose him or her any money. In such instances, the investor must now work even harder to cover any loses incurred and still afford to live comfortably in retirement. As such, the investor forgoes this headache of stock picking and elects to give his money to a mutual fund manager. This action on the surface seems correct,
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