Diversification is the key to make more money in 40s
You will have to save and invest money where you’ll get most returns. Diversification is the key to make more money in 40s. One of the ways to make more money from investments is ETFs.
ETFs have best characteristics of both-stocks and mutual funds. They are easy to understand, have lower trading expenses and come in handy when the investor wants to create a diversified portfolio.
In this, index investing can be an option for someone who’s in 40s and looking for higher gains. Index funds replicate a particular equity index by investing in the stocks that the index tracks.
In an index, each stock has different weightage. For example, if a stock has a weightage of 10% in an index, a fund based on the index would also allocate 10% of its portfolio to the stock.
Meanwhile, index investing has low expense ratio, there is an automatic clean-up of portfolio and there is no security-specific risk. Also, since an investor doesn’t have manage specific funds, managing portfolio under index investing is easier.
