INDEX FUNDS VS. MUTUAL FUNDS FOR WEALTH CREATION.

Difference Between Index Funds And Mutual Funds.

#knowthedifference

People who know the power of stock market but do not have enough time to research about companies have options like Mutual funds and Index Funds to create wealth from Stock Market.

Now let's see the difference between Index Funds and Mutual Funds-

•Index funds are passive funds and Mutual funds are active funds.

•Mutual funds are managed by fund mangers with objective to outperform the market whereas Index funds follow an Index (eg. Nifty) .

•The expense ratio of Index funds are very less(approx 0.3% or less) and expense ratio for Mutual funds are comparatively high since funds are actively managed by professionals.

Historic Performance-

According to historic data very few Mutual Funds were able to outperform the market and gain more returns for it's investors.

Expert's View-

According to legendary Investor Mr. Warren Buffet buying a low cost Index fund is the best investment.

Fun fact- Mr. John Bogle is the inventor of Index funds.

Points to note-

•High expense ratio can drain a lot of wealth in long term , so while choosing a mutual fund make sure you check the expense ratio.