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Index Fund and its Importance

Learn about the importance of index fund and how to invest for longer run

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Index Fund and its Importance

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  1. INDEXFUND ANDITSIMPORTANCE

  2. OVERVIEW ANINDEXFUNDISASPECIFICTYPEOFEQUITYMUTUALFUNDTHATAIMS TOMIRRORTHEPERFORMANCEOFAPARTICULARSTOCKMARKETINDEX LIKETHEBSESENSEXORTHENSENIFTY50. INDEXFUNDSAREPASSIVELYMANAGEDSCHEMES.THEOBJECTIVEHERE IS TO DELIVER RETURNS IN LINE WITH THE BENCHMARK INDEX AND NOT TOOUTPERFORMTHEM,ASINTHECASEOFACTIVELYMANAGEDFUNDS. ASINDEXFUNDSMERELYTRACKTHEBENCHMARKINDICES,THEYDONOT REQUIRETHERESOURCESOFADEDICATEDFUNDMANAGEMENTTEAM.

  3. IMPORTANCEOFINDEXFUNDS INDEXFUNDSAREIMPORTANTFORSEVERALREASONS. EASY&SIMPLETOUNDERSTAND STABLERETURNS LOW-COSTINVESTING BROADDIVERSIFIEDPORTFOLIO NOFUNDMANAGERBIAS

  4. EASY&SIMPLETOUNDERSTAND THECONCEPTOFINDEXFUNDSISVERYSIMPLE.THEFUNDJUST REPLICATES A CHOSEN BENCHMARK INDEX AND DELIVERS A SIMILARRETURN. ITISNOWEASYTOINVESTININDEXFUNDSTHROUGHAMUTUAL FUND INVESTMENT APP. WITH A FEW CLICKS, THE INVESTMENT PROCESSCANBECOMPLETEDWITHINAFEWMINUTES.

  5. STABLERETURNS INDEXFUNDSDONOTASSUMEHIGHERRISKSANDDELIVER STEADYRETURNS.THEOBJECTIVEISTOSIMPLYTRACK&MATCH THEFRONTLINEINDICESANDNOTBEATTHEM. FIRST-TIMEINVESTORSWHOARERISK-AVERSECANSTARTTHEIR MUTUALFUNDINVESTMENTJOURNEYWITHINDEXFUNDS.

  6. LOW-COSTINVESTING INDEX FUNDS DO NOT REQUIRE THE SERVICES OF A SEPARATE FUNDMANAGEMENTTEAMTOPICKTHESTOCKSANDMANAGE THE PORTFOLIO. THERE IS NO ACTIVE BUYING & SELLING OF STOCKSININDEXFUNDS. DUETOTHESEREASONS,THECOSTSINCURREDBYINDEXFUNDS AREAMONGTHELOWEST.YOUCANEASILYCHECKOUTTHEIR EXPENSE RATIOS IN A MUTUAL FUNDS APP. THE COSTS ARE ULTRA-LOW AND HELP THE INVESTORS TO SAVE SIGNIFICANTLY INTHELONGRUN.

  7. BROADDIVERSIFIEDPORTFOLIO THE PORTFOLIO OF AN INDEX FUND IS THE SAME AS THE UNDERLYINGBENCHMARKINDEX,SUCHASTHENSENIFTY50OR THE BSE 500. THESE INDICES ARE DESIGNED TO GIVE A FAIR REPRESENTATIONTOALLTHEMAJORSECTORS,INDUSTRIES,AND COMPANIESINTHEECONOMY. IF YOU SELECT AN INDEX FUND TRACKING THE NSE NIFTY 50 ON ANYMUTUALFUNDAPPININDIA,YOUCANINVESTINTHETOP50 COMPANIESTHROUGHASINGLEFUND.

  8. NOFUNDMANAGERBIAS ACTIVELYMANAGEDFUNDSAREOFTENSUBJECTTOTHEHUMAN ERRORS & PERSONAL BIASES OF THE FUND MANAGER IN STOCK SELECTION AND PORTFOLIO MANAGEMENT. THE EXIT OF A STAR FUNDMANAGERCANADVERSELYAFFECTTHEPERFORMANCEOF SUCHSCHEMES. BUT INDEX FUNDS ARE FREE FROM SUCH PROBLEMS AS THE INVESTMENTS ARE CLEARLY DEFINED, AND THE PROCESS IS MOSTLYAUTOMATED.THEREISVERYLITTLEHUMANDISCRETION INMANAGINGINDEXFUNDS.

  9. CONCLUSION INDEXFUNDSOFFERASIMPLE,EFFICIENT,ANDSMARTAPPROACH TOINVESTINGANDBENEFITTINGFROMTHESTOCKMARKETS. SOMEOFTHEBESTMUTUALFUNDAPPS,LIKENAVI,PROVIDETHE PERFECTPLATFORMTOINVESTININDEXFUNDS.

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