Indexing is free from punitive management fees, and it is free from the concern that even shareholders of the most dynamic, stable individual companies have about their investments from time to time. Quite simply, there are as many reasons to invest in index funds as there are investors. Some investors lack the time, interest, or confidence in their own ability to pick and track individual stocks. This, in no way, makes these people inferior investors. Those who get to this point and determine that their best choice is to index are to be saluted.
Indexing also serves as a backstop for people who do choose to invest in individual companies.
One particularly Foolish strategy is the Index Plus a Few, in which the investor places the majority of his or her portfolio into an index fund, and then carefully selects a couple of stocks to augment overall performance. In this part, we're going to talk about the myriad index products that exist, but let's start with the Granddaddy of them all. The lower the turnover, the lower the annual tax bill. Go to the top of this page and type SPY into the search box. You will get a current quote on how much Spiders are trading per share.