Are index funds still a safe investment?

Published on: 28-Mar-2019
Category: Trading
Last updated: 28-Mar-2019

Are index funds still a safe investment?

ETFs respond to every move on the stock market and track their current price. However, this was not always positive for investors in 2018. They felt the weak share price development, which in turn saw the providers only as a small break.

Worldwide, assets managed by ETFs fell 0.3 percent to $ 4.7 trillion. In 2018, there was a cash inflow of 426 billion euros, of which 300 billion went into shares.

In Europe, 45 billion euros flowed into index funds, a major change from the previous year in 2017. Thus, the inflows of assets fell by 52 percent. For this, European investors once again invested more in ETFs on government bonds, investing 14.6 billion euros.

Nevertheless, you should not sell your index funds anyway, but look for it, because otherwise you would only get bigger losses. As a new investor you should plan at least 15 years. Data from the German stock corporation show that in the past investments in the DAX were made after about 12 years. Therefore, long-term thinking is important if you are serious about investing in ETFs.

So investing in index funds will continue to be a rewarding business if you have patience and invest bit by bit. If you put your entire fortune into stocks at one go, the risk is currently too great to make a loss, as the stock market price may fall rapidly this year. Then you invested your money at inflated prices and you would lose money very quickly.

In contrast to active funds managed by fund managers, ETFs are a cheaper alternative for investors. In the 15 years mentioned above, only one in four active funds manage to beat corresponding index funds. Although the stock market fluctuates, ETFs continue to be a good investment in the long term.


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