Tori Dunlap Describes Herself as an 'Index Fund Girly All the Way.' Here's What We Can Learn From Her Investing Strategy

If you're just starting out with investing, it's easy to feel overwhelmed and intimidated. I just opened my first brokerage account a few months ago. Even though I went in with a plan, it was still a little nerve-wracking to transfer money from my checking account and buy investments. Right now, my focus is saving money to buy a home next year, but I intend to become a regular investor and open a retirement account after I get into a house. And when I'm ready to go all in, I'll be taking a page from money expert Tori Dunlap.

Dunlap, who is also known as the Financial Feminist, recently noted in a podcast interview with Equity Mates that "investing should not be sexy -- it should be consistent, stable, and over a long period of time." She also described herself as "an index fund girly all the way."

Index funds are one of the easiest and most approachable ways to invest. Let's take a closer look at Tori Dunlap's investing strategy and learn more about how index funds can make investing easier.

What are index funds?

Index funds are a type of stock or bond investment that tracks a market index. There are many different index funds to choose from, and some of the most popular track the S&P 500, which is made up of the 500 biggest companies listed on U.S. stock exchanges.

You don't have to think big when it comes to index funds, though. You can also find index funds that track stocks in certain industries, single countries, and beyond. You can invest in them via your taxable brokerage account as well as through a retirement account, like an IRA.

Why does Tori Dunlap like index funds?

Index funds certainly work for Tori Dunlap's investing philosophy -- namely, investing is something to do consistently and over a long period, with an eye toward stability. When you contribute money to your brokerage account, you can use it to buy shares of index funds -- and doing so regularly will give you the opportunity to grow your money over time.

Let's say you buy shares of an index fund tied to the performance of the S&P 500. In 40 of the last 50 years, the S&P 500 gained value and returned an average of 10% per year. It's crucial to stay invested and keep investing more money over the long term because in individual years (or months, or weeks), the stock market fluctuates. But if you can commit, you stand a good chance of a solid return over many years. No, it's not sexy, but it works.

Other benefits of index funds

Index funds are also a low-cost way to invest, and if you're just starting out, this is an attractive prospect indeed. They have lower fees than actively managed funds do since there's no human managing your investments. According to The Motley Fool, broad market index funds (like an S&P 500 fund) typically have expense ratios around 0.05%. So if you have $10,000 invested in one, you'll only pay $5 per year for the privilege.

Finally, index funds make it easier to maintain a diversified portfolio, which is a major key to successful investing. You don't want all your money tied up in one company, and if you buy shares of index funds, you get exposure to many different companies, all in one fell swoop.

Index funds aren't a good way to make a fast buck, but if you're hoping for dependable returns over the long term and a low bar of entry (you can get started with investing with just a little money), give them a look.