{"id":377,"date":"2025-05-01T21:00:48","date_gmt":"2025-05-01T21:00:48","guid":{"rendered":"https:\/\/foundmoneyconsultants.com\/?p=377"},"modified":"2025-04-18T21:27:00","modified_gmt":"2025-04-18T21:27:00","slug":"what-is-this-indexing-thing","status":"publish","type":"post","link":"https:\/\/foundmoneyconsultants.com\/index.php\/2025\/05\/01\/what-is-this-indexing-thing\/","title":{"rendered":"What is this Indexing Thing?"},"content":{"rendered":"

If you have been following this newsletter for any period of\u00a0 time, or if you follow the financial industry, you have probably come across the term, “indexing.” Now I could write a 2,000 word document going over the intricate details of how it works, how the companies can afford to do it, all the different strategies and many other details like that.\u00a0 However, I am not trying to put you to sleep or confuse you.\u00a0 Instead, I am going to keep it simple and tell you everything you need to know.<\/p>\n

So what is Indexing?\u00a0 Simply put, indexing is a strategy used to grow money you are putting away for your future.\u00a0 We call it indexing because the growth\/interest you gain is tied to an index, not directly invested.\u00a0 Most commonly, they are tied to the S&P 500, but it could be the DOW, a foreign exchange or something else entirely.\u00a0 It all depends on what is offered by the issuing company.\u00a0 The cool thing is that because it is tied to an index, you capture the gains of the market but you are protected from suffering its losses.\u00a0 The only thing that affects your growth is the cap rate of the product, the participation rate, or the spread.\u00a0 I will only be covering the most common strategy, the cap rate.\u00a0 So let’s look at an example.<\/p>\n

Let’s say you have an indexed product, and the cap on your product is 10%.\u00a0 So what that means is that whatever the market does, you get that percentage up to 10%, but remember, you are protected against all losses.\u00a0 We will compare it to regular investments with both investments starting at $100,000.<\/p>\n

<\/p>\n

So, after 5 years which would you rather have? But there’s a problem with this example.\u00a0 In a regular investment you have fees, right?\u00a0 There are transaction and annual management fees, that you don’t have with an indexed investment!\u00a0 According to reports by Morningstar, they average around 3%.\u00a0 So if you add in the 3% fee each year… You will net 14%, 4%, , -23%, 17%, and 9% respectively.\u00a0 This will bring your new total to $119,487.\u00a0 Now how much better off are you?\u00a0 That is the power of indexing!<\/p>\n

Like more info or a strategy call – reach out!\"\"<\/p>\n","protected":false},"excerpt":{"rendered":"

If you have been following this newsletter for any period of\u00a0 time, or if you follow the financial industry, you have probably come across the term, “indexing.” Now I could write a 2,000 word document going over the intricate details of how it works, how the companies can afford to do it, all the different […]<\/p>\n","protected":false},"author":1,"featured_media":378,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"nf_dc_page":"","footnotes":""},"categories":[1],"tags":[],"class_list":["post-377","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-uncategorized"],"_links":{"self":[{"href":"https:\/\/foundmoneyconsultants.com\/index.php\/wp-json\/wp\/v2\/posts\/377","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/foundmoneyconsultants.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/foundmoneyconsultants.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/foundmoneyconsultants.com\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/foundmoneyconsultants.com\/index.php\/wp-json\/wp\/v2\/comments?post=377"}],"version-history":[{"count":1,"href":"https:\/\/foundmoneyconsultants.com\/index.php\/wp-json\/wp\/v2\/posts\/377\/revisions"}],"predecessor-version":[{"id":379,"href":"https:\/\/foundmoneyconsultants.com\/index.php\/wp-json\/wp\/v2\/posts\/377\/revisions\/379"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/foundmoneyconsultants.com\/index.php\/wp-json\/wp\/v2\/media\/378"}],"wp:attachment":[{"href":"https:\/\/foundmoneyconsultants.com\/index.php\/wp-json\/wp\/v2\/media?parent=377"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/foundmoneyconsultants.com\/index.php\/wp-json\/wp\/v2\/categories?post=377"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/foundmoneyconsultants.com\/index.php\/wp-json\/wp\/v2\/tags?post=377"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}