Index Funds: long-term investment strategy
Posted: Wed Dec 11, 2024 10:28 am
Citizens are facing an exceptionally complicated scenario. The high inflation that is putting pressure on the Spanish economy and the low profitability offered by banking institutions threaten to demolish the savings of Spaniards. For this reason, it is more important than ever to have a long-term investment strategy, a plan in which index funds can play a major role. We explain the reasons.
Table of Contents
Why is it essential to invest?
Invest without risk
Active investment
Passive investing and index funds: Advantages of a long-term investment strategy
The data supports the use of index funds as a long-term investment strategy
Why is it essential to invest?
Throughout history, investing has been the best way to make chinese overseas canada database savings grow. Thanks to what is known as compound interest, which Albert Einstein once said was the most powerful force in the universe. In short, it is about those resources that are added to the initial capital and on which new interest is generated.
Over the past decades, its power has been translated into strong revaluations against other assets, such as gold, debt or cash. But now the need to invest is much greater. Among the reasons are:
Protect yourself from inflation. Price levels in Spain and the rest of the world have reached levels not seen in decades. This means that savings in the bank are worth much less with each passing day.
Securing the future. If the present seems difficult for savers, the future will be no less so. The high volume of public debt in Spain will require higher tax payments, which will reduce disposable income. It will also limit pension payments, which will sooner or later have to be cut, so the best way to prepare for this is to have a comfortable cushion. Investment offers that possibility.
Other reasons can be added to the list, but they are merely derivatives of those two pillars.
Invest without risk
Once the importance of investing is recognised, the next step is to choose the best way to do it. A task that seems easy, but is perhaps the most difficult of all. Investors have a huge range of assets in which to invest their money, but each of them offers a different return and also has an associated risk.
Index Funds Investment Guide
Active investment
Investing in traditional stocks, in shares of established companies, can bring high returns, but also involves a lot of risk. After all, the same companies that dominated the market a few years ago are now barely standing. And those that still reign, such as Coca-Cola or Apple, are often excessively expensive, which reduces the returns obtained.
Faced with this dilemma, investors have a few options. The first is to rely on professional managers through their funds.
Passive investing and index funds: Advantages of a long-term investment strategy
For this reason, what is known as passive investment has become increasingly popular, that is, investing in index funds that replicate different indices. A choice that brings several advantages:
Lower commissions
Higher average profitability
Lower risk
Exposure to the best companies at all times
Simplicity to understand investment
These reasons are behind the rise of passive investing and index funds as the best way to invest savings in the long term.
The data supports the use of index funds as a long-term investment strategy
The growth of index funds is so enormous that their numbers have not stopped skyrocketing. Thus, of the 950 billion that have been allocated to equities, shares, throughout 2021, up to 883 billion were allocated to passive management.
Even the greatest investor of all time, Warren Buffett, has succumbed to the power of passive investing. The so-called 'Oracle of Omaha' has signed off on investing 90% of his estate in a low-cost S&P index fund, the main US equity index, with the remaining 10% in bonds.
In short, the growth of passive management and index funds is unstoppable. A development that is also beneficial for the participants themselves. In fact, as the number of investors in this type of investment vehicle increases, the fees are increasingly lower. Therefore, one of the best ways to ensure your future is to invest in index funds . An option that has more and more followers.
To take advantage of these benefits and have a long-term investment strategy, at inbestMe we offer one of the most complete selections of index funds on the market. In addition, they are backed by major global management companies such as Vanguard, the largest passive management firm in the world, among others. Also, with very low commissions. Don't miss the opportunity and start increasing the value of your savings.
Table of Contents
Why is it essential to invest?
Invest without risk
Active investment
Passive investing and index funds: Advantages of a long-term investment strategy
The data supports the use of index funds as a long-term investment strategy
Why is it essential to invest?
Throughout history, investing has been the best way to make chinese overseas canada database savings grow. Thanks to what is known as compound interest, which Albert Einstein once said was the most powerful force in the universe. In short, it is about those resources that are added to the initial capital and on which new interest is generated.
Over the past decades, its power has been translated into strong revaluations against other assets, such as gold, debt or cash. But now the need to invest is much greater. Among the reasons are:
Protect yourself from inflation. Price levels in Spain and the rest of the world have reached levels not seen in decades. This means that savings in the bank are worth much less with each passing day.
Securing the future. If the present seems difficult for savers, the future will be no less so. The high volume of public debt in Spain will require higher tax payments, which will reduce disposable income. It will also limit pension payments, which will sooner or later have to be cut, so the best way to prepare for this is to have a comfortable cushion. Investment offers that possibility.
Other reasons can be added to the list, but they are merely derivatives of those two pillars.
Invest without risk
Once the importance of investing is recognised, the next step is to choose the best way to do it. A task that seems easy, but is perhaps the most difficult of all. Investors have a huge range of assets in which to invest their money, but each of them offers a different return and also has an associated risk.
Index Funds Investment Guide
Active investment
Investing in traditional stocks, in shares of established companies, can bring high returns, but also involves a lot of risk. After all, the same companies that dominated the market a few years ago are now barely standing. And those that still reign, such as Coca-Cola or Apple, are often excessively expensive, which reduces the returns obtained.
Faced with this dilemma, investors have a few options. The first is to rely on professional managers through their funds.
Passive investing and index funds: Advantages of a long-term investment strategy
For this reason, what is known as passive investment has become increasingly popular, that is, investing in index funds that replicate different indices. A choice that brings several advantages:
Lower commissions
Higher average profitability
Lower risk
Exposure to the best companies at all times
Simplicity to understand investment
These reasons are behind the rise of passive investing and index funds as the best way to invest savings in the long term.
The data supports the use of index funds as a long-term investment strategy
The growth of index funds is so enormous that their numbers have not stopped skyrocketing. Thus, of the 950 billion that have been allocated to equities, shares, throughout 2021, up to 883 billion were allocated to passive management.
Even the greatest investor of all time, Warren Buffett, has succumbed to the power of passive investing. The so-called 'Oracle of Omaha' has signed off on investing 90% of his estate in a low-cost S&P index fund, the main US equity index, with the remaining 10% in bonds.
In short, the growth of passive management and index funds is unstoppable. A development that is also beneficial for the participants themselves. In fact, as the number of investors in this type of investment vehicle increases, the fees are increasingly lower. Therefore, one of the best ways to ensure your future is to invest in index funds . An option that has more and more followers.
To take advantage of these benefits and have a long-term investment strategy, at inbestMe we offer one of the most complete selections of index funds on the market. In addition, they are backed by major global management companies such as Vanguard, the largest passive management firm in the world, among others. Also, with very low commissions. Don't miss the opportunity and start increasing the value of your savings.