How to start investing in index funds (step by step)

An index fund replicates a stock market index (such as the S&P 500 or the MSCI World) instead of trying to beat it. With no active management, its fees are minimal, and evidence shows that over the long term it beats most actively managed funds.

Why index funds?

• Very low fees: a TER of 0.05%–0.30% versus 1.5%–2.5% for active management.
• Instant diversification: with a single fund you own thousands of companies worldwide.
• Simplicity: no need to pick stocks or guess the market.
• Favourable taxation in Spain: you can switch between funds without being taxed.

Step 1: define your goal and horizon

Investing in the stock market makes sense from 5-10 years onwards. The longer your horizon, the more volatility you can take on.

Step 2: choose where to buy them

• MyInvestor: a platform with its own index funds (Global, S&P 500, Nasdaq 100) and third-party ones, with very low minimums.
• Fidelity funds: the Fidelity Index range offers MSCI World and S&P 500 with very competitive TERs.
• iShares (BlackRock) funds: the institutional index range, available through several platforms.

Step 3: automate your contributions (DCA)

Set up a monthly recurring contribution. Dollar Cost Averaging makes you buy more shares when the market falls and fewer when it rises, reducing the risk of entering at the worst moment.

Step 4: don't touch it and review rarely

The investor's worst enemy is themselves. Selling in downturns locks in losses. Stay the course and let compound interest work for decades.

Common mistakes to avoid

• Paying high fees for funds that rarely beat the index.
• Trying to time the market and missing the rallies.
• Panic-selling during crashes.
• Not diversifying and concentrating everything in one country or sector.