Would you recommend investments in an index fund for the long-term?
-Dr Yadav
For long-term investments, equity mutual funds are a good vehicle. Among mutual funds, you choose between an actively managed fund where the fund manager decides which sectors and companies to invest in, or you can opt for an index fund where investments are made in exactly the same companies that are a part of the index the fund tracks. Index fund investments are a compromise in the sense that you decide you want returns that match the index, and not more than that. On the other hand, a well-performing actively managed fund has the potential to beat the larger indices. Hence, we would recommend investments in a good actively managed fund for the long-term.
This article was originally published on April 05, 2012.
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