Anchor Your Portfolio with Index Funds by Art Stahl

The anchors you carry on your boat are not complicated or high tech devices, but you wouldn’t leave the dock without them; they can hold your boat in place when you’re not driving, keep your bow headed in the right direction, and
help prevent your boat from being swept away in a storm. This article explains how index mutual funds might be able to provide similar benefits for your investment portfolio. One of the most basic distinctions among mutual funds is whether the fund manager employs an active or a passive management approach. An active management style means the fund manager uses analytic or forecasting tools to select individual stocks for the fund portfolio. In a passive approach, the fund manager simply buys whatever stocks are represented by a well-known market index. Funds that attempt to match exactly the day-to-day fluctuations of a market index are index funds.
What Are Index Funds?
By investing in an index fund that mimics the…

 

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