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Benefits of Index Funds
- Limits your risk by spreading across a number of companies
- Low management fees
- Returns in major global indices beat the majority of money managers
- Long term history
- Provides a dividend income stream as well as the potential for capital gains
- Is liquid and can be accessed from anywhere in the world
- Low transaction fees
- Long term view
Disadvantages of Index Funds
- Some indices do not have a critical mass of great companies – shop wisely
- Volatility of capital value can make people fearful
- Major global events cause panic
- Underlying profitability of major companies is difficult to track individually
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