Also why index funds. Low cap in particular. Index and mutual funds are both collections of stocks. You spread your risk that way. Stocks rise and fall rapidly.

The difference between them is that mutual funds are managed. People will try to predict the market and build and change them. It gives people the impression that someone’s working to make sure they have the best fund possible, but the reality is that predicting the market is basically impossible, so you pay extra for that self assurance. Index funds are static so they are cheaper

Both mutual and index funds are built of a collection of stocks from various companies based on what is called their market capitalization. That’s roughly what a company is worth in it’s entirety as well as its ability to generate revenue. Large caps are things like your giant tech companies. Medium caps are smaller. Something like walgreens. Low caps are companies that have just ipo’d.

The reason for choosing low caps is they have a much larger potential to grow in value. Apple isn’t going to double in value, but a new start up could. Spread your risk around many startups and a few are going to increase in value many times over. But it also mitigates your risk as it’s a group rather than just one.

Low cap is a long term plan. Buy when you are young, and hold onto them for 20 to 30 years. IMO it’s the best tradeoff between growth and safety. Leaning more on growth.

When you approach or after retirement, trade them for something really stable like US treasurey bonds. Those hardly grow at all, but they also tend not to lose value either.

I also don’t actively invest. Your job will set aside a percentage of your salary that goes directly into an investment account. That percentage is something like 5%, but in workday or whatever your job uses, you can set how much you want. I’ve set mine as high as 30% before. Try to keep as little cash in your bank account as possible with a rainy day fund set aside. Cash doesn’t grow in value. You don’t want a lot of it.

So what happens to the money your company puts into the investment account? It is automatically invested into something of their choosing. Typically something middle of the road because it is the same for all employees regardless of age. So what you want to do is log into that investment account and change what it is automatically buying to whatever it is that you want. Set it and forget it.

This stuff can get really complex, so listen to what several different people have to say. This is just what I do.