Your Cheat Code

An index fund buys every stock in a given market index — like the S&P 500 — in one purchase. Instead of picking individual winners, you own a little piece of 500 of America's largest companies. The earliest dollars you invest work the hardest because they have the longest runway to grow.

In 2007, Warren Buffett bet a million dollars that an S&P 500 index fund would beat a basket of top hedge funds over 10 years. He won, and it was not close. The index fund returned about 125% while the hedge funds averaged only about 36%. Simplicity beat sophistication — and it cost a fraction of the fees.