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How to use index fund make money?

How to use index funds make money

Index fund is an index that adjusts offset of the tracking target, the principle is to track changes in the target index, to realize the fund variety that grows synchronously with the market.

In simple terms, that is to spread out the constituent stock of investment target index, strive for the yield rate on the stock portfolio to fit the average return on capital which represented by the target index.

Index funds are easy to operate. In theory, basing on the percentage of each security in the index, to buy a proportionate share of securities, and keep long-term holding is ok. Index fund operation is cheap. It is suitable to use the holding strategy, no need to change the stock, so it requires far lower fees than actively managed funds, sometimes it will be 1%.The impact of this on earnings is still relatively large when in bear market. 

Index fund performance is highly transparent,it’s simple, when investor find that the benchmark index of Index fund tracking target rise, they will know how much the fund that they invested rose. Index funds can effectively avoid non-systemic risk. This is mainly because, on the one hand, index funds are widely diversified. On the other hand, the Index which the funds focus on, will have a longer history for tracking. So, he risks of index funds are predictable to a certain degree.

Then, how to choose?

As the income level of index funds Is similar to the exponent of what they’re tracking, the investors have to analyze the investment style and investment value of each index before choosing the index funds, and choose the best timing of entrances and exits, choose the index that have investment value and fits the preference of venture

After you choose the index that you will invested in, you will need to start to track the index funds. According to the different investment objectives of index funds, the performance evaluation criteria are also different.

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