Diversified portfolios of index funds and ETFs
The first step to investing in index funds with a good strategy is to look for diversified portfolios of funds and ETFs. And when it comes to investing without worrying, the key is to have good diversification .
Be careful! This is assuming that you want to be carefree. If you want to spend 12 hours a day researching companies to make a decent return, you can do that too. But few people want and can devote that much time to managing their assets.
For everyone else who wants to make a good return without having to constantly monitor it, diversification is the best option.
And diversification in a portfolio of funds and ETFs is maximum. Consider that, in themselves, index funds and ETFs are very diversified (since they replicate indexes that, within them, have dozens or hundreds of companies).
But in addition to this diversification, you have another gambling data hong kong additional option, which is to have different funds and ETFs in your portfolio. Thus, you have great diversification by geographic region, by type of asset, by sector...
And that is the best strategy for the long term: Good, highly diversified assets .
Index Funds Investment Guide
Automated management
The next step in the strategy is to use an automated manager. Unlike active managers, these automated managers work with algorithms that buy and sell according to previously defined rules.
This automated management works in a simple way: The portfolio is made up of a series of ETFs and index funds, and each one behaves differently in the market. Some go up while others go down. This is logical, right?
What is done with automated management is to sell those ETFs and funds that have risen the most to buy those that have fallen the most , balancing the proportion of each of these investments. In this way, your investment will always remain within your risk profile without taking more or less risk.
Thanks to this automated management, the commissions charged to investors can be substantially reduced. This has a direct impact on the profitability obtained by the investor, who, in the long term and due to the effect of compound interest , sees his capital grow substantially.
Minor optimizations and changes
The above would already be a very intelligent investment strategy, but you can still add an extra touch. You can use the same thing, but with small optimizations or variations that seek to maximize profitability.
For example, you could opt for our ETFs Dynamic portfolio , where the portfolio is made up of two parts: core and satellite , and with management that combines long-term strategies with short-term tactics, all with a clear objective: to reduce volatility and take advantage of bullish market trends.
You could also opt for our Value ETF portfolio , where everything mentioned above applies, but with a bias towards value investing, which can make your profitability grow in the long term.
As you can see, the best strategy to successfully invest in index funds or ETFs over the long term is to have a good diversified portfolio of index funds . In this way, we will be protected and obtain the maximum profitability with the minimum volatility.