In which index fund we should invest?
VFIAX and QQQM are often described as some of the best index funds for beginner investors.
| COMPANY | Expense Ratio | 3-year Performance |
|---|---|---|
| Motilal Oswal Nasdaq 100 FOF Scheme | INR 4,235 cr | 21.48% p.a. |
| Bandhan Nifty 50 Index Fund | INR 1,002 cr | 13.49% p.a. |
| UTI Nifty 50 Index Fund | INR 1,002 cr | 13.49% p.a. |
| ICICI Prudential Nifty 50 Index Fund | INR 5,733 cr | 13.43% p.a. |
The best equity index fund is the ones that track the index as closely as possible. Ideally there should not be any difference between the index and the fund return but practically, there would be a slight deviation based on the time of tracking, weightage in the stock invested or rebalanced.
S&P 500 index funds can help you instantly diversify your portfolio by providing exposure to some of the biggest companies in the U.S. Index funds in general are fairly inexpensive compared with other types of mutual funds, making them an attractive option for most investors.
Indexing has several benefits including lower costs, broad-based diversification, and lower taxes. Investors, however, must consider the index fund that they select since not every one is low-cost, not some may be better at tracking an index than others.
- Best Index Funds. 3 Yr Returns. 17% - 19%
- Nifty 50. 3 Yr Returns.
- Nifty Next 50. 3 Yr Returns. 19% - 21%
- Nifty Midcap. 3 Yr Returns. 24% - 26%
- Nifty Smallcap. 3 Yr Returns.
- Global/US. 3 Yr Returns.
- Others. 3 Yr Returns. 14% - 16%
Are Index Funds Safe Long-Term? The short answer is yes: index funds are still safe in the long term. Only the right index funds are safe. There may be some on the market that you want to avoid.
Disadvantages include the lack of downside protection, no choice in index composition, and it cannot beat the market (by definition).
Are Index Funds Good for Beginners? Index funds can be an excellent option for beginners stepping into the investment world. They are a simple, cost-effective way to hold a broad range of stocks or bonds that mimic a specific benchmark index, meaning they are diversified.
Experts agree that for most personal investors, a portfolio comprising 5 to 10 ETFs is perfect in terms of diversification.
What if I invested $1000 in S&P 500 10 years ago?
According to our calculations, a $1000 investment made in February 2014 would be worth $5,971.20, or a gain of 497.12%, as of February 5, 2024, and this return excludes dividends but includes price increases. Compare this to the S&P 500's rally of 178.17% and gold's return of 55.50% over the same time frame.
In 1980, had you invested a mere $1,000 in what went on to become the top-performing stock of S&P 500 (^GSPC 0.97%), then you would be sitting on a cool $1.2 million today. That equates to a total return of 120,936%. The stock? None other than Gap (GPS 4.99%).
Think About This: $10,000 invested in the S&P 500 at the beginning of 2000 would have grown to $32,527 over 20 years — an average return of 6.07% per year.
VFIAX and QQQM are often described as some of the best index funds for beginner investors. Sam Taube writes about investing for NerdWallet. He has covered investing and financial news since earning his economics degree from the University of Maryland in 2016.
Summary. Investing in the S&P 500 index fund, such as VOO, is a winning long-term strategy. Historical data shows that the market has consistently gone higher despite obstacles and downturns.
Unless it is an investment in an Equity Linked Savings Scheme (ELSS), wherein there is a lock-in of 3 years from date of investment, there are no restrictions on investment redemption. Investors need to keep in mind any applicable exit load on their investment.
| Index or Fund | 1-Year Total Return | 5-Year Annualized Return |
|---|---|---|
| S&P 500 Index | 26.29% | 15.69% |
| Vanguard 500 Index Admiral Shares | 26.24% | 15.65% |
| Schwab S&P 500 Index Fund | 26.25% | 15.66% |
| Fidelity 500 Index Fund | 26.29% | 15.68% |
Index funds tend to be low-cost, passive options that are well-suited for hands-off, long-term investors. Actively-managed mutual funds can be riskier and more expensive, but they have the potential for higher returns over time.
The most popular index funds track the S&P 500, which includes 500 of the top companies in leading industries of the U.S. economy. Other common benchmarks include the Russell 2000, Dow Jones Industrial Average (DJIA), Nasdaq 100, MSCI EAFE Index, and the Wilshire 5000 Total Market Index.
If you're new to investing, you can absolutely start off by buying index funds alone as you learn more about how to choose the right stocks. But as your knowledge grows, you may want to branch out and add different companies to your portfolio that you feel align well with your personal risk tolerance and goals.
What if I invested $100 a month in S&P 500?
For instance, say your investments are earning a 12% average annual return compared to 10% per year. If you're still investing $100 per month, you'd have a total of around $518,000 after 35 years, compared to $325,000 in that time period with a 10% return.
With our practice the allocation of your portfolio is based on your needs, risk tolerance, tax situation and long-term goals. A portfolio that is just in the S & P 500 can be more volatile than a more broadly diversified portfolio, provide less income and may have negative tax consequences.
It's easy to see why S&P 500 index funds are so popular with the billionaire investor class. The S&P 500 has a long history of delivering strong returns, averaging 9% annually over 150 years. In other words, it's hard to find an investment with a better track record than the U.S. stock market.
While indexes may be low cost and diversified, they prevent seizing opportunities elsewhere. Moreover, indexes do not provide protection from market corrections and crashes when an investor has a lot of exposure to stock index funds.
Investing in multiple index funds that track different indices can help you gain exposure to a wider range of companies and sectors, and can help you avoid being overexposed to a single index or sector.
