Index funds have been endowed with the myth crown of "immortality" and "long-term rise" by many financial and business educational institutions. So when is it appropriate to buy this highly respected index fund?

When is the right time to buy index funds?

Index funds are funds that track and copy indexes. It is best to buy when the index is undervalued, so how can we know whether the index is undervalued now?

Very simple, you can know by the price-earnings ratio. For individual stocks, the P/E ratio is not as high as possible, nor is it as low as possible. Stocks that are ridiculously low are ignored, and speculative bubbles may occur if they are too high.

However, because the index is composed of a basket of stocks, even if individual companies inflate their profits, it will not affect the overall net profit of all companies in the index. Therefore, the price-earnings ratio of the index is much more reliable and effective. Generally, the low P/E ratio is the undervalued index. In some stock trading software, such as the valuation center on the snowball market page, we can see the historical valuation data of these indexes.

For the industry index, it is of little significance to simply look at the valuation data. We need to deeply understand the life cycle of the industry, choose an industry index with great development potential in the future, and it is more appropriate to buy it before it breaks out. Although some companies in industries that have entered recession have low valuations, their future earnings will not be very good.

Buying time is not judged by price-earnings ratio alone, and not all indexes with low price-earnings ratio are worth buying. We'd better make an all-round investigation of index funds, and then decide whether to subscribe and choose the right buying opportunity. It should be noted that the above contents are only personal opinions, not as investment guidance, and investment needs to be carefully investigated.