2. Choose a large-scale fund, because the bigger the fund, the smaller the risk, and generally will not face the risk of liquidation;
3. Choose an index fund with a relatively low fund rate, that is, when choosing an index fund, you need to compare the subscription rate, selling rate, management rate, custody rate and sales service fee of the fund one by one, so as to choose an index fund with a relatively low fund rate for fixed investment;
4. With the help of online fund screening tools, we can screen out the index funds with the top ranking of 1/4 in recent 3 years, 2 years and nearly1year for fixed investment. Or you can choose the index fund with the top ranking in the fund ranking column of the fund purchase platform.
Index fund refers to the fund that buys all or part of the securities in the securities market included in the index according to the index standard, and its purpose is to achieve the same income level as the index.
For example, the goal of the Shanghai Composite Index Fund is to obtain the same income as the Shanghai Composite Index. The Shanghai Composite Index Fund buys the stocks in the index according to the composition and weight of the Shanghai Composite Index, and accordingly, the performance of the Shanghai Composite Index Fund will fluctuate like the Shanghai Composite Index.
The most prominent feature of index funds is low cost, and delaying tax payment will have a great impact on the fund's income. Moreover, this advantage will be more prominent for a long time. In addition, the simplified portfolio will make it unnecessary for fund managers to contact brokers frequently, or to choose stocks or determine market opportunities.
Specifically, the characteristics of index funds are mainly manifested in the following aspects:
low cost
This is the most prominent advantage of index funds. Expenses mainly include management expenses, transaction expenses and sales expenses. Management expenses refer to the expenses incurred by fund managers in investment management; Transaction cost refers to the transaction expenses such as brokerage commission when buying and selling securities. Because index funds adopt holding strategy and do not need to exchange shares frequently, these expenses are far lower than those of actively managed funds, and the difference sometimes reaches 1%-3%. Although this is a small number in absolute value, the long-term cumulative result will have a great impact on the fund's income because of the compound interest effect.
Disperse and guard against risks
On the one hand, because index funds are widely diversified, the fluctuation of any 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 tracking history, the risks of index funds can be predicted to some extent.
Deferred tax payment
Because index funds adopt the strategy of buying and holding, 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 investments, index funds will sell their stocks and realize part of the capital gains. In this way, the annual capital gains tax (in developed countries such as the United States, capital gains are within the scope of income tax) is very small. Coupled with the compound interest effect, delaying tax payment will bring many benefits to investors.
Less monitoring
Since operating index funds does not need to take the initiative to make investment decisions, fund managers basically do not need to monitor the performance of funds. The main task of index fund managers is to monitor the changes of corresponding indexes, so as to ensure that the composition of index funds is suitable for them.