Registered Financial Consultant Jeffrey L. Wendel provides every day consumers with education and advice in wealth management. The many topics Jeffrey L. Wendel covers on building wealth include index funds.
An index fund buys securities comprised of an entire index, for example securities that belong to Standard & Poor’s 500. The way the fund works is that it collects from multiple investors to purchase stocks, bonds, and securities.
The fund works for a few reasons. Because these funds do not try to beat the market (as it is a mirror of what is happening), it balances risk over the entire portfolio including reducing the impact of volatility.
The features and benefits of an index fund are many. For one, it is a good way to invest in the entire market. It also reduces risk simply because the market index rises in value over time. Loss and gain potential is less volatile. Moreover, this passive way of investing has lower management fees.
Index funds are one of the many different types of investments that a financial consultant might suggest to clients trying to build their wealth while reducing their risk.
