What are index funds?
An index fund tracks an index like the S&P 500 or Nasdaq. Meaning the fund has the same stocks in it's portfolio as the stocks that are present in the index. An index fund is not that different from an ETF which also tracks indexes most of the time. The main difference is that an index fund can only be bought at the end of the day for the NAV (net asset value) and ETFs are traded directly on exchanges just like stocks. It’s easier to buy ETFs than index funds. ETFs are also more flexible and most of the time have less maintenance fees. Another difference might be the initial costs. You can basically buy just one share from any ETF but some index funds require a larger initial buy of a few thousand dollars. Taxes may also be in favor of ETFs because you are directly buying or selling from someone else while using an index fund you are buying/selling from the fund. Most index funds are passively managed.
You should look at the underlying costs before you determine what would be the best option for your trading strategy (ETF or index fund). Both are very similar and offer low to medium risks at very low costs.
Chapters: The Ultimate Investing Guide
- 1. Intro2. What is investing?3. What are stocks?4. Types of stocks5. Why buy stocks?6. How to buy stocks7. Store stocks8. Stock splits9. Stock quests10. What are bonds?11. Secured bonds and maturity12. How do bonds work?13. Credit rating14. Treasury bonds15. Corporate bonds16. Municipal bonds17. Agency bonds18. Bond quests19. Mutual funds20. Mutual funds earnings21. ETFs22. Why ETFs23. Index funds24. Hedge funds25. Derivatives26. Commodities27. Indices28. Overview29. Determine company value30. IPOs31. Penny stocks32. Dividends33. Financial health34. Profitability35. Operating efficiency36. Liquidity37. Solvency38. Market Evaluation39. Not only numbers40. Investing portfolio considerations41. Creating portfolio42. Buy/Sell Strategy43. Broker44. Emotions45. Final steps46. Key Concepts
How you think about this?