Benefits of Investing in Index Funds

Most investors try to invest their money in individual stocks or mutual funds. Few investors choose to invest in index funds, which are sometimes the best securities you can choose.

What is an Index Fund?

An index fund is a passively managed investing strategy that is set up to match the performance of an index. For example, an investment firm can purchase the same stocks in the S&P500 and closely match the performance. Most investors invest in stock index funds, but they can also invest in currency or bond index funds as well.

Benefits of Index Funds

There are several benefits to investing in index funds over individual stocks or other funds. Here are a couple of advantages you should consider:

·        You don’t have to spend a considerable amount of time and energy managing a portfolio.

·        You will not have ridiculous fees to pay a pretentious money manager.

·        You can keep a very well-diversified portfolio without having to purchase a considerable amount of securities.

·        You don’t have to pay excessive capital gains taxes by buying and selling securities on a regular basis.

Beat the Market Average By Matching it?

Most stock market investors want to beat the market average. That is an ambitious goal, but very few are able to do so. The Efficient Market Hypothesis states that it is impossible to outperform the market average over the long-term. Warren Buffet and some other legendary investors disagree, but they are among the few investors who can actually do so.

You need to be realistic when you set investing goals for yourself. You probably won’t be able to beat the stock market average. You may ironically make higher returns by trying to match it instead. One of the best ways you can do so is by investing in an index fund.

Most investment managers claim that they can help you beat the stock market average. There are actually few money managers that can live up to this claim. Index funds have outperformed the majority of mutual funds and money managers on the market.

You may not think that you can make higher returns by trying to match the stock market instead of beating it. However, the data shows that index investors tend to actually outperform those who invest in mutual funds or individual stocks.

Choose the Right Index Funds

There are many great reasons to invest in index funds. That being said, you will realize more returns by investing in some over others. You will want to look at the cost structure of different index funds before you invest in them. Make sure that you aren’t investing in one that charges more than a mutual fund does.

Ask your broker for a breakdown of expense ratios of different index funds before you choose one.

Consider Investing in Index Funds

Too many investors limit themselves to investing in stocks and mutual funds. Index funds are another option you can consider. They will allow you to limit your risk, lower your expenses and realize higher returns than if you invested in other securities.

Could Bitcoin be Viable Currency in the Future?

Bitcoins are a virtual currency that was introduced nearly three years ago. They have received a bad reputation because many people have used them to buy drugs, pornography and gamble over the Internet. However, consumers have used them for legitimate purposes as well. Some experts believe that bitcoins are going to become a major currency in the near future.

How Are Bitcoins Different?

Bitcoins are a unique form of currency that differs from others in many ways. First of all, people do not physically take possession of them. Bitcoins are stored electronically in an account on a bitcoin server. Another major difference with bitcoins is that there is only a finite supply of them.

Direction of Bitcoins

Many technocrats think fondly of bitcoins, but most normal people have never heard of them. Nevertheless, they are starting to gain more attention and more people are expected to use them soon.

Bitcoins are changing the way people think of money. They may not necessarily be able to overtake the dollar or euro anytime soon, but it is has become much more popular in the past year. The value of bitcoins have increased by nearly 140% since the beginning of 2012. That is a bigger increase than any fiat currency in the world.

Value of Bitcoins to Consumers

People can use bitcoins to purchase any number of goods and services over the Internet. They may also consider using bitcoins as an investment.

The value of bitcoins may soar against many fiat currencies that are constantly printing more money since there is only a finite supply of bitcoins in circulation. People may make large returns on their investments holding onto bitcoins when their governments use quantitative easing strategies.

Can Bitcoins be a Sustainable Currency?

Many experts wonder whether or not bitcoins will last indefinitely. Government officials have said that they have a number of concerns about the use of bitcoins and some leaders insist that something needs to be done about them.

The government has been unable to track people using bitcoins on the dark webs and may not be able to do much to deter them from using them in the future. However, they create a number of other risks as well.

Many people are worried about using bitcoins, because they can be lost if a server crashes or the system is hacked. Consumers are also vulnerable to fraud since bitcoins are largely untraceable. Many of these concerns are common to online banking systems for fiat currencies as well, but the possibility of losing virtual money is a larger concern.

Nevertheless, bitcoins seem to be growing in popularity and may be a dominant currency in the coming years. Some experts believe that they may eventually become a world reserve currency, but that could be eons away.