Low-cost index funds are a type of investment that allows you to own a small portion of every company in the market, weighted according to the market. They are a popular choice for many investors due to their low fees, tax efficiency, and tendency to outperform most active traders and fund managers.
The low fees associated with index funds are a significant advantage. It's not very expensive to own a little bit of everything, and since fees are one of the main reasons investors trail the market, you can get ahead by paying just low fees when you own an index fund.
Index funds are also very tax efficient. In our tax system, you only owe taxes when you sell a security. Actively managed funds sell securities all the time and trigger taxable distributions, while index funds mostly hold the same stocks year in and year out.
Lastly, index funds tend to outperform most active traders and fund managers. So, you can get better returns with lower fees and lower taxes if you own a diversified portfolio of index funds.
Now, how does Daffy fit into this? Daffy is a not-for-profit community built around a new, modern platform for giving. It's a Donor Advised Fund (DAF) that allows you to easily donate to almost every US public charity, track tax-deductible contributions, and access donation receipts all in one place.
Daffy waives all membership fees for members with less than $100 in their fund, making it a cost-effective option for those looking to manage their charitable giving. Plus, Daffy offers exposure to index funds from Vanguard and BlackRock, with average costs of just 0.045% for our Standard portfolios.
So, if you're looking to invest in low-cost index funds while also managing your charitable giving, Daffy could be a great option for you.