index fund is a kind of fund that grows synchronously with the target index on the principle of fitting the target index and tracking the change of the target index. The difference between \xd\ index fund and other funds is that it tracks the performance of stock and bond markets and follows a stable strategy. Its advantages in the securities market include not only effectively avoiding non-systematic risks and low transaction costs, but also having the characteristics of less monitoring investment and simple operation. Specifically: \xd\ 1. The cost is low. This is the most prominent advantage of index funds. Expenses mainly include management expenses, transaction costs and sales expenses. Because index funds adopt the holding strategy and don't need to change shares frequently, these expenses are far lower than those of actively managed funds. Although this is a small difference in absolute amount, due to the existence of compound interest effect, the accumulated results will have a huge impact on the fund's income in a long period of time. \xd\ 2. Disperse and prevent risks. On the one hand, because index funds widely diversify their investments, the fluctuation of any single stock will not affect the overall performance of index funds, thus diversifying risks. On the other hand, because the indexes pegged by index funds generally have a long history to track, the risks of index funds can be predicted to some extent. \xd\ 3. Delaying tax payment. Because index funds adopt a buy-and-hold strategy, the turnover rate of the stocks they hold is very low. Only when a stock is removed from the index, or when investors demand to redeem their investment, index funds will sell the stocks they hold and realize some capital gains. In this way, the capital gains tax paid every year is very small (in developed countries such as the United States, capital gains belong to the scope of income tax). Coupled with the compound interest effect, delaying tax payment will bring many benefits to investors.