What is an index fund?
Index fund, as its name implies, is a fund that invests in index stocks, that is, by buying some or all of the stocks contained in an index, the investment portfolio of index fund is constructed, with the purpose of making the change trend of this investment portfolio consistent with the index, so as to obtain roughly the same rate of return as the index.
Index fund is a kind of fund with the principle of fitting the target index and tracking the change of the target index to realize the synchronous growth with the market. The investment of index funds adopts the investment strategy of fitting the target index return rate, and invests in the constituent stocks of the target index in a diversified way, so that the stock portfolio return rate fits the average return rate of the capital market represented by the target index.
Index fund refers to the operation of the fund, according to the proportion of constituent stocks in the selected index (such as the Standard & Poor's 500 Index in the United States, the Nikkei 225 Index in Japan, the weighted stock price index in Taiwan Province, etc.). ), and choose the same asset allocation model to invest, in order to obtain the income synchronized with the market.
What are the advantages and disadvantages of index funds?
Advantages:
1, human factors have little influence.
2. This ratio is very low. The subscription and redemption rate of general stock funds is 1- 1.5%, and that of index funds is 0.5- 1.2%.
3, passive tracking index personal finance calculator, very intuitive. It is also suitable for short-wave band operation.
4. Long-term investment has little risk and excellent return.
Disadvantages:
1, the fluctuation is too large. For short-term operation, the risk is great.
2. lead the rise but not resist the decline. In any market, the position of index funds is very high, and it is impossible to avoid the risk of the stock market through the operation of fund managers.
3. The risk of fund redemption. If you want to quit early, you have to sell at a low level, which is easy to lose money.
4. The fixed investment of the fund is not applicable in all cases, and the effect is very different.