After tracking the S&P 500 from 1965 to 2021, Berkshire Hathaway found the compound annual gain in the S&P 500 was 10.5%. In the case of S&P 500 index funds, the stocks are those of the companies listed in the S&P 500. With 500+ stocks in their portfolio, S&P 500 funds are especially diversified, their securities representing a range of industries. With 500+ stocks in their portfolio, S&P 500 funds are especially diversified, their securities representing a range of industries. The diversified, passive approach of S&P 500 funds — like most index funds — means an investor's downside is generally limited.

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