Index funds are relatively more popular compared to traditional investment assets, with which you have to let go of certain control over your assets. The simplicity of investing in index funds makes it a very popular choice for investors who prefer a traditional growth of their wealth. Here is everything you need to know about them.
What are index funds?
In India, there are two major indices – Sensex and Nifty 50. Out of these two, Nifty 50 is more popular and has more participation in terms of the financial big houses constantly pouring their money into it.
Investing in index funds
When an investor chooses to buy an index security, he/she buys the same set of stocks under the index, in the same proportion.
There are three major types of index funds that you can choose to invest in – Index ETF and Index Mutual Funds and directly purchasing the futures of the indices.
Advantages of investing in index funds
Historically, indices have only grown year-on-year, with very few years in the last few decades when indices have returned a negative value. With a few good years, indices have returned almost twice as much as traditional bank rates.
Who is it for?
Index funds are for people who understand market movement and how global news impacts that. Investors of index funds are those who do not feel secure with fund managers managing their money.