subject: Building Your Investment Portfolio With Index Funds [print this page] Investment portfolio Investment portfolio
When you plan to invest your money so as to multiply it, you need to build a strong portfolio at first. The index funds, systematic investment plans, fund of funds, balanced funds, tax saving funds and equity mutual funds are some of the finest products available in the Indian market that help you build a strong portfolio. As far as the index fund is concerned, this professionally managed mutual fund offers many investing benefits. Nowadays people like to invest in funds that offer higher diversification. In a way, they help you build a better investing portfolio. There are many funds that come under the category of managed funds. Usually the managed funds are further broken in to two categories namely passive and active finds.
What are index fund investments?
Generally active funds try to outperform the entire benchmark index by selecting the sensible stock. On the other hand the passive funds attempt to match entire benchmark index. For this very reason, index funds are also known as passive funds. These funds hold the indexs security in similar percentage to what all shares in the index are represented to. By better understanding the investing benefits you can easily build a sturdy portfolio. Here are some of the benefits that you can enjoy by investing in the index products:
Low costs- With these funds you dont have to worry at all about any research costs, bonuses paid to active fund managers and high salaries. Most of the funds are 0.50 percent cheaper as compared to all other funds available in the Indian investment market.
Diversification- With these funds you are able to invest in almost all or most of available shares in the index. By doing this, you receive the luxury to maintain a diversified portfolio. Simply put, a diversified portfolio helps you reduce the risks, especially the unsystematic risks. This is a smart way to reduce risks involved in the investments without forgoing the returns.
Low fees- People always want to invest in products that come with low fees and portfolio management charges. As these funds are managed passively, they come with lower fees and charges as compared to other products that are available in the market.
Performance- The index funds perform better than other non-index products. By using the net asset value, you can judge the performance of these funds and decide to invest directly in the index.
Stress of investing- As these funds are easy to invest and manage, they come with minimum stress as compared to other avenues. Furthermore, it is simple to measure their performance and monitor the funds.
Asset allocation- With the index fund investments, it is simple enough to fix personal asset allocation plans.
Investing in the index products online, from safe and secured investment websites is the rising trend amongst people. Thanks to the availability of all investment products at agents online portals, people find it easy to take a decision. Investing in the index assets is not only simple but also beneficial. Consider investing in the index and build your own portfolio with required diversification.
