For instance, you get the advantage of no long term capital gains as you don't need to buy and sell your holdings. Index funds are quite tax-efficient than several other investments. This is because, with index funds, you minimize your time spent researching individual stocks and simply can allow the fund's portfolio manager to invest in an index that already includes the stocks you wish to invest in. Based on the type of index funds you choose, you’ll spend anywhere from a few minutes to a few hours per year. Index fund investments save a lot of time. Besides, you can also purchase other focused index funds that target specific financial market areas. You can buy anything from stock index funds and bond index funds, two of the most popular investment strategies. Index funds are available for various investments. Index funds don't require any business knowledge or stock picking therefore, they are suitable for everyone with money to save and invest. That's because an index fund manager has to simply buy the stocks or other investments in an index without you having to pay them. Unlike index funds, actively managed funds have much higher fees and lower returns than the market. One of the key advantages of index mutual funds is their low fees. Here are some of the reasons why investors find index funds beneficial: By simply matching the benchmark performance of the financial markets over time, index funds can allow investors to turn their investment into a huge asset.

Index funds are one of the most straightforward ways to build wealth.

However, it is important to note that the performance of the S&P 500 index is better in the long term as compared to others. The average annual return for the S&P 500 index is close to 10% over the long term.The asset allocation in the case of an index fund is the same as that of its underlying index, which is why the returns offered by these funds are comparable with their underlying index.Index funds are passively managed as the key objective of these funds is to track and imitate the performance of a popular stock market index such as NSE Nifty 50 and S&P BSE Sensex.The fund imitates the portfolio of an index and is also known as an index-tracked mutual fund.companies.Īmong the key features of an index mutual fund include. For instance, the S&P 500 index represents 500 of the largest U.S. A market index is a hypothetical portfolio of stocks and securities that represents a section of the market.

An index fund is a specialized mutual fund that buys the same stocks as in a particular market index.