spread risk
The biggest feature of the index is portfolio investment. Stock index funds have at least ten investment targets, and the maximum position will not exceed 35%, which is normally controlled within 10%. In other words, the risk of a single stock has little effect on the index, and it is absolutely necessary for investors to diversify their investment appropriately, especially when the ability of stock selection and research level are not yet available.
Easy-to-understand index funds are characterized by simplicity and transparency, which can be easily understood by any investor who has just entered the stock market. For example, the securities ETF, with the exception of three English letters, is known as a fund investing in the securities field through the title of reading chinese Securities Index Gold. Its shareholding is transparent and its operation is established. This fund can be traded like buying and selling stocks, and at the same time, it can achieve the same income as related indexes.
The convenience of flexible trading refers to its good liquidity. The turnover of normal index funds is above 65.438 billion, which makes it easy for ordinary investors to enter and leave. Secondly, it is about its distribution. You can allocate all its constituent stocks through an index. If you do it yourself, it will be difficult to achieve it easily. First, you have no access to funds. Second, you don't know what a leader is. In addition, most cross-border index funds and money funds are T+0 transactions, which is a simple paradise for investors who want to adjust their positions in time or trade in the day.
Low cost Because it is a passive fund, there is no requirement for the investment ability of the manager, and the technical treatment is mainly considered, so the transaction cost is very low. For example, money funds are exempt from subscription and redemption fees.
The allocation of ability index funds is conducive to cultivating investors' overall situation and ultimately improving the ability of asset allocation. Compared with 4,000 A-share stocks, there are only a dozen major industries, and only a few focus on them. Grasping the general direction is a hundred times easier than selecting one by one (4,000 stocks /40 industries), and there are varieties that cross markets, regions and deadlines, so that you have a comprehensive asset allocation thinking.
When you are familiar with the investment of index varieties, you will find that your ability to grasp individual stocks has improved a lot at once, because you have global thinking, industry judgment and leading ideas, so for ordinary investors, index funds are the best tool to cut into the investment market!