What is an index investment?

were created stock indexes to monitor the overall performance of the stock market or market industry. Buyers who invest in shares included in these index indices of the index. The aim of this kind of investment is to correspond to the earnings of a particular index.

Stock Indexes are simply stock lists. People cannot invest directly in the index. Investors can buy mutual funds and stock funds (EFT), which include all shares listed in a particular index. These include the S&P 500® diameter, Dow Jones®, NASDAQ-100® and Russell 2000®. Investors choose the index they want to follow and find a fund that reflects this index. Investors may not complete any complex analysis to determine which stocks to buy. The fund automatically purchases in the index. Mutual funds trade above the counter and are not listed on the stock exchange. As a result, the intermediary account is not obliged to buy mutual funds. The prices of shares of mutual funds are calculated once a day. This price withIt calls a net asset value (NAV). Mutual funds generally have a minimum investment requirement.

Since the index fund manager does not have to examine which stock shares, mutual funds index generally have lower operating fees than other mutual funds. Some mutual funds used in investing the index charge the buyer in advance the commission called Load . There are also resources without loads that do not have initial commissions or other sales fees.

All EFTs, including those used for index investment, are traded on the stock exchange like other stocks. EFT shares do not have a calculated Each day. EFT shares prices are changing throughout the day based on the volume of trading.

Baccker account is required to purchase EFT. The broker commissions apply to all EFT stores. Unlike shares of mutual funds, EFT can be purchased for margin and sell short. Investors can determine chosStku shares they want to buy. There is no minimum investment to purchase EFT shares used to invest the index.

Investors can compare the annual costs of investing in a mutual fund and EFT. Each fund charges annual operation and other fees. These fees are called the cost ratio of the Fund . Investors generally prefer funds with lower costs.