What are the advantages of index funds?
1, the transaction cost is low. Because index funds are passively managed, they don't need to adjust positions frequently, and they don't need to spend a lot of time and energy on market analysis and stock selection, so the fund management expenses and transaction expenses are lower than those of active funds. Investment index funds can help investors save transaction costs.
2. It can help investors spread risks. Because index funds follow the index to invest, and the composition of the index is more complicated, including a basket of stocks or bonds, investment index funds can better diversify their investments. Even if the price of some securities falls, it will not have much impact on the whole portfolio.
Is it suitable for novice investment?
Index fund is a simple and transparent fund product with scattered risks. Novice investors can also try. When purchasing index funds, we should pay attention to the following aspects:
1. There are many kinds of index funds in the market, and different index funds have different risk-return characteristics. Novice investors should choose suitable index funds according to their risk preference, investment objectives and investment period. Generally speaking, broad-based index funds are more stable than narrow-based index funds, and stock index funds have more appreciation potential than bond index funds.
2. Buy index funds through fixed investment. Fixed investment in funds is a way to buy funds at a fixed interval and amount, which can help investors share the cost of funds, reduce the impact of short-term market fluctuations and obtain more stable income. Novice investors can make a reasonable fixed investment plan according to their income and expenditure, such as a fixed investment every month or quarter.