Although my country's fund industry is not developing very fast, the scale of funds is generally showing a rising trend.

According to data released by the Asset Management Association of China, as of March this year, the scale of my country's public funds was 16.64 trillion, a record high, an increase of 1.87 trillion compared with December 2019.

This shows that more and more people are investing in funds.

Since funds are divided into different types, and the returns and risks of different types of funds vary greatly, it is necessary to have an in-depth understanding of each fund before investing.

Among various types of funds, stock funds and index funds have relatively large returns and risks. So if you want to make long-term investments, which of these two types of funds is better?

Index funds are actually a branch of stock funds, because index funds also invest in the stock market.

If you want to distinguish index funds from other stock funds, they can be divided into passive stock funds and active stock funds. Index funds are passive funds.

If you want to invest in funds for the long term, you can choose between these two funds in the following ways.

Which fund should you choose for long-term investment?

First, look at expectations for returns and risks.

If you want something a little more stable, index funds are naturally more suitable than stock funds.

An index fund tracks the rise and fall of an index, and this index is formed by a weighted average of a group of stocks, so buying an index fund is equivalent to spreading funds across this group of stocks.

Although other stock funds will also buy many stocks, the number of stocks purchased may be smaller than that of index funds, and they may focus on buying one or a few stocks.

Generally, the greater the number of stocks purchased by a fund, the more diversified the risks will be, and the price of the fund will be relatively more stable.

However, compared to index funds, other stock funds have broader growth potential.

The rise of index funds relies heavily on the rise of the index they track, but as you have also seen, my country's A-share market index has remained the same for ten years. It has been a volatile trend for a long time in the past, which limits the height of the rise of index funds.

The growth space of other active stock funds mainly depends on the investment ability of the fund manager. In theory, there is no upper limit.

Therefore, if you want to have a fund with large room for growth, you still have to choose an active stock fund.

Secondly, look at how the funds are invested.

If you invest money in one go and then hold it for a long time, it is better to choose an active stock fund.

The reason is also mentioned above, because the stock index may not go on a long-term upward trend, and you may not make money by holding an index fund that tracks the index for a long time.

Active funds, on the other hand, are likely to achieve long-term appreciation.

If you invest funds in the form of fixed investment, then index funds have more advantages.

Because even if an index does not rise for a long time, it is unlikely to fall all the time. The worst case scenario is that it fluctuates within a range, with troughs and peaks.

The use of fund fixed investment can lower the holding cost of the fund when the index is at a low point, and you can make money when the index returns to its peak.

But when active stock funds hit a trough, they may not be able to return to their peak.

Therefore, if you adopt the fixed investment method and buy index funds for long-term investment, you can make making money more stable.