Which is more risky, fund risk or stock market risk?
The risk of the stock market is greater than that of funds, and there are many risks in stocks. Buying an index fund is equivalent to buying a basket of stocks, and the prices of these stocks are weighted average. Therefore, even if a stock plummets, its decline is not as big as that of a single stock after the average of other stocks.
Funds are generally issued by fund companies and managed by professional fund managers, which reduces investment risks. The fund itself has the characteristics of risk diversification. Although there is no limit on the fluctuation of funds (OTC funds), the fluctuation of funds is much more stable than that of stocks.
What is the difference between stock funds and index funds?
1, with different meanings: according to regulations, equity funds need to invest at least 80% of their fund assets in stocks; Index fund refers to a fund that gains income by tracking the trend of a specific index.
2. Different risks: Equity funds face greater risks because they want to buy most of the fund assets. If all the heavyweight stocks fall, then the fund will also fall; Index funds consist of many stocks. Buying an index fund is equivalent to buying a basket of stocks, with little risk.
3. Different returns: Generally speaking, when the heavy stocks of stock funds rise, the income of the fund will increase; The increase of the index is limited, so the income of the index fund is relatively stable.
4. Different investment strategies: stock funds are active investment strategies, the main purpose of which is to actively obtain income; Index fund is a passive investment strategy, the main purpose of which is to reduce tracking error.