![]() As McBrien explains, that comes with a set of advantages and disadvantages. Index funds are less risky since they follow the market instead of trying to beat the market. Index funds are passive funds that mirror the returns of popular indexes like the S&P 500 and the Nasdaq 100. Should you get both index funds and mutual funds? Investors should know these differences before allocating their money to either type of fund: The funds offer many similar benefits, but they also have key differences. “This diversification strategy effectively spreads the investment risk across multiple assets.” “Both index funds and mutual funds gather investments from a collection of individuals, creating diversified portfolios that span across several securities,” says Scott McBrien, founder and chief investment officer at The Laser, an investing system and app. You don’t have to stay informed on dozens of stocks when a fund does it all for you. Funds offer instant portfolio diversification with very little work. Business & Finance Click to expand menu.īuying shares of a fund rather than individual stocks makes it easier to invest.
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