The Internet and the democratization of technology have brought access to many new and attractive products: investment funds, derivatives, options and futures… And index overseas chinese database funds, which, due to their risk mitigation, are making a big place for themselves among national investors. Do you want to start investing in index funds without knowing how ? Follow these steps.
What is an index fund?
It is a fund whose portfolio replicates a stock market index. It can be the DAX40, the national IBEX35 or any of the North American ones, with the S&P500 at the top.
What the fund does is imitate the composition of the index, in such a way that the parity with its evolution over time is very similar. This allows, as we said at the beginning, to mitigate the risk . Following the patterns of the Portfolio Theory , what it does is avoid fluctuations and the volatility of a value or a specific share.
Who are index funds aimed at?
Index funds are a perfect product for those investors who do not want to experience the daily stress of the rises and falls in the value of a share, and who prefer to delegate the responsibility of keeping up to date with what is happening to external managers.
In this type of index management, the investor “forgets” about having to constantly make purchases and sales and delegates the task to a portfolio manager, who is the one who decides at any given time which products to invest in.
Therefore, it is ideal for investors who want to invest in the long term , without having to worry.
However, for the more technologically savvy, they can also control them personally if they operate from an online platform such as inbestMe .
What are the advantages of investing in index funds compared to other products?
There are three main advantages to these index funds.
First, the risk is more contained than making a single purchase of a share.
On the other hand, index funds allow us to move our money from one fund to another without having to pay capital gains. These are only paid when we finally undo the position in the funds, which is an unquestionable advantage from a tax point of view.
Finally, managing a portfolio of this type of securities is relatively simple. With the help of a specialized platform such as InbestMe, we can start investing in index funds without being an expert. In this way, commission and management costs are lower than in other financial products, achieving greater profitability.