Buffett once said: "By investing in index funds on a regular basis. An amateur investor who knows nothing can often beat most professional investors. "
Let's take a look at several unique advantages of index funds.
First, the life cycle is long, and index funds can be said to be immortal varieties of all funds. Why do you say that?
Because the index fund tracks the constituent stocks of the index, the constituent stocks of an index are relatively stable but will be updated regularly, and the index is composed of constituent stocks selected according to certain compilation rules. For example, the CSI 500 Index is composed of the top 500 stocks with total market value after excluding the constituent stocks of the CSI 300 Index and the top 300 stocks with total market value from all A shares. These constituent stocks will be updated regularly, those that do not meet the requirements will be eliminated and new ones will be included. Therefore, the index can live forever, and the index fund that tracks the index can live forever.
There is still room for upward growth in the future. Buying an index is equivalent to buying the country's future economy. This is because the index reflects the overall performance of the corresponding industries. As long as the national economy continues to develop, relevant sectors can also be upgraded all the way. Index funds can naturally rise.
The transaction cost is low. Index funds are passive funds. Compared with actively managed funds, it has lower requirements for managers, lower dependence on fund managers, simpler management and lower corresponding rates. The management fee of active funds is mostly 1.5%, and that of index funds is generally 0.5%.