An introduction to index funds for new investors
These days, many mutual fund investors prefer index funds. Several mutual fund companies are now promoting similar plans. Informed investors are paying attention to low-cost index funds, expressing their preference for them in every mutual fund forum. If you’re a new mutual fund investor who’s not sure what all the excitement is about, here are some key considerations.
Definition: Index Funds
An index fund is a diversified equity portfolio. Investing in an index fund allows you to buy small fractional shares in many firms.
For various reasons, index funds are a valuable tactic to invest. To begin with, they pose a lower risk than individual equities. Rather than placing all of your money in one company or sector, you’re spreading it across numerous industries and hundreds of businesses.
As a result, if one company fails, you will not be adversely affected. And when one company is successful, it balances off …