index fund is one of the types of funds. It takes stock index as the investment target, thus tracking the performance of the index. It is a passive fund. Index funds are suitable for long-term fixed investment, with relatively high returns, but not all index funds are suitable for long-term fixed investment. So what index funds are suitable for long-term fixed investment?

what index fund is suitable for long-term fixed investment?

1. The net value fluctuates greatly

When the net value of the fund fluctuates, the fixed investment will buy more shares at the low level and less shares at the high level, thus reducing the average cost of the shares. Therefore, as long as the net value of the fund rises above the average cost, we can get benefits.

in other words, the premise that fixed investment can reduce the cost lies in the fluctuation of the fund's net value. The more severe the fluctuation, the more obvious the effect of fixed investment. Suppose there is such an extreme situation that the net value does not fluctuate, then the fixed investment will not be able to buy more shares at a low level, thus reducing the cost. Therefore, when making a fixed investment, you should choose a fund whose net value fluctuates greatly.

2. High growth

Knowing that we want to choose a fund with large fluctuations in net value for fixed investment, we also need to know an important prerequisite, that is, "the overall performance of the fund will rise in the long run". If the performance of the fund continues to be poor for a long time, the overall trend is downward, even if it is a fixed investment, it is difficult to make a profit. Therefore, it is necessary to choose index funds with high long-term performance returns and good growth for fixed investment.

The high-growth index has two advantages. First, enterprises in the growth stage are generally in the initial stage of listing, and their market value is small. At this time, they will expand the financing scale, and after the precipitation period, they will actively seek investment opportunities. During this period, the scale of enterprises will continue to grow, and they can obtain high-growth income; Secondly, companies with smaller market value are more likely to be driven by funds in the bull market, so the increase will be higher.

In addition, index funds are advised to choose those with small tracking errors, which means stable returns. Generally speaking, investors can choose several funds with large net value fluctuations, good long-term performance and small tracking errors as their portfolios, and finally remind investors that funds are risky and need to be cautious in investment.