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Sometimes after the long Christmas holidays, doing a lot of research into buying individual shares might sound tiring (though, for some people, a new year brings new opportunities). In any case, if I had decided not to buy individual shares this year and simply put a spare £1,000 into the FTSE 100 index back in January, here is what would have happened.
How investing in an index works in practice
By the way, when I talk about putting money into an index, I do not mean buying all of the shares in that index myself.
Rather, I would simply have bought into an index tracker fund. Whereas a lot of investment funds pay managers to decide what shares to buy, a tracker fund does what it says on the tin.
By buying shares in such a tracker, I would be investing in a portfolio that is meant to represent as closely as possible a specific index (in this case, the FTSE 100).
There are lots…
