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Not sure a wise investor would 100% use "index" funds especially one with such a large > 1M portfolio. At that level you would need to look at diversification
by walshemj 9y ago
Not sure a wise investor would 100% use "index" funds especially one with such a large > 1M portfolio.
At that level you would need to look at diversification both on a geographical and sector level.
In the UK I would of course sell enough to use up my CGT allowance - you can also move up to 20k£ into an ISA to put the shares beyond tax for CGT and Dividend Tax
- rpedela 9y agoIndex funds are already diversified. When you invest in one, you are betting that the entire economy or a sector of the economy, depending on the index fund, will increase in value.
- walshemj 9y agoYes but take Enron for example or any other value trap an index fund must buy those. And the Massive buying of indexes bids up the price of shares like FANG's beyond the shares real value.
- rpedela 9y agoOn average, one company in the portfolio going bankrupt isn't going to make much of a difference assuming the portfolio is large enough. Most index funds have a large enough portfolio.