First of all, when investing, we should look for the tracking target of index funds. The main goal of investment index fund is to obtain its income. Therefore, it is the investment goal of index funds to obtain the same income as tracking index. Choosing the right index to reduce risk is an important skill for investing in index funds.
Secondly, the index fund with small tracking error is preferred. Generally speaking, whether a fund is worth investing depends on the tracking index of index funds. The essence of index fund is passive tracking index, in which the smaller the tracking error, the stronger the management ability of fund manager. On the contrary, the greater the tracking error, the weaker the management ability of fund managers. The stronger the management ability, the better the choice of fund managers.
In addition, investors need to compare the background of the company to which each fund belongs. Because the benchmark index analysis of index funds is a complicated process, although it is passive investment and the operation is relatively simple, it is not suitable for inexperienced individual investors to invest. The stronger the background of a fund company, the stronger its strength, so the higher its investment cost, accurate calculation, rigorous operation process and natural first-class investment level.
Finally, compare the rates of index funds when investing. Index funds are passive funds, that is to say, one of their characteristics is low rates. Usually, when tracking index funds with the same target index, it is difficult to widen the performance gap. However, as long as investors can make long-term fixed investment patiently, the important reason that affects investment is that the rates of different funds are different every year.
When the stock market rises, the advantages of passive funds are particularly prominent. However, at this time, you can't choose blind investment, try to be familiar with product attributes and investment strategies, and master its related investment methods. Moreover, index funds are more suitable for long-term investment, and the better the future trend, the higher the investment income.