Posts Tagged ‘market trend’

Index Funds: What They Are And How They Perform

Posted February 15, 2009 by Bernz

Index funds are a type of mutual fund that combines a number of different stocks into a single stock market investment vehicle.  Instead of buying the individual stocks, you can buy shares of the fund.  That way you own a portion of many stocks instead of owning many shares of just one stock.

This type of ownership appeals to many investors who prefer to spread their risk over a number of stocks, but may not have the investment money that it  takes to buy a lot of stocks across a wide section of the market.

Of course, some people are critical of mutual funds since they typically yield less than individual stock portfolios.  This is largely due to the fees charged by most mutual funds.

Mutual Fund profits are decreased by the management fees.  Since the stocks in the funds are personally selected by the managers, the managers are well paid for their research and expertise.  But you can minimize those management fees by investing in index funds.

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Posted in Financial Education, Investing Strategies, Mutual Funds, Stock Market Investing | No Comments »