Today’s topic of discussion
1, What is an index mutual fund?
2, Why should you invest in index mutual funds?
3, How do you invest in index mutual funds?
What is Index Mutual Fund?
An index mutual fund is a type of index that generally invest in nifty 50 or Sensex stock market index company. Funds that are included in this index invest in the top 50 companies. Index mutual fund invest in stocks which included in the index and which stocks are left out are sold.
Since index mutual funds follow only fixed indexes so there is no need for extra experts. As a result, cost is low and it becomes helpful for investors.
But I would suggest some more articles about mutual funds:
➡ How to find Best Mutual Funds in 2024?
➡ SIP vs. Lump Sum: Do not make mistake in 2024!
Why should you invest in Index mutual funds?
1. Invest in low-cost:
Since these funds are conducted by passive management so there are no need of expert.So,the cost of management fees is low and the cost is saved a lot.
2. The probability of man’s fault is low:
There is no need for man’s intelligence in Index Mutual Fund.You will only invest in those companies which are included with the index and sold the fall out companies . There are no need of explanation about market,so the probability of error is low.
3. Invest in various sectors:
You can invest in many sectors through Index Mutual Fund. Through Nifty 50 or Sensex, you can get opportunity of investing in various important sectors like banking, technology, farming,fast moving consumer goods(FMGC), etc.
4. No opertunity of baiasd investment:
There are no effect of any expert or person in fixed company,so there are no probability of favoritism. It is managed by an automatic system which invests by tracking index stock.
How do you invest in Index mutual funds?
1. Invest for a long time:
It is always profitable for long time investment in Index Mutual Fund.It is able to return good return by avoiding market fluctuations in long term investment.
2. Use SIP(Systematic Investment Plan):
It is better to invest in SIP rather than Lump Sum in an Index Mutual Fund. It confirms a good return in long-term investment.
3. Verify the performance of the fund:
It is important to verify the performance of return before investing in an index mutual fund. Though most Index return the same fund nevertheless check which fund gives you the highest return.
How you can find the best Index Mutual Fund?
You should keep a few things in your mind to find out the best Index Mutual Fund in 2024:
Expense Ratio:
It is important to have low expenses in Index Mutual Fund. It helps you to increase your profit by less your management cost.
Long-term return:
Check the long-term return of funds. If you check the recent 5-10 years return history, you will understand the performance of the fund .
Risk Profile:
Check the risk profile of different Index Mutual Fund.Though Index funds are low risky but few funds may have high risk.Choose your fund as per investment objective and tolerance.
Conclusion
It may be profitable and easy to invest in an Index Mutual Fund for those who want to invest passively. An Index Fund is an excellent option for good returns in a low cost, and an opportunity to invest in various sectors. Good profit is probable in long-term investment.