1. Diversification: Stock indices provide exposure to a diverse portfolio of stocks, effectively reducing the risk associated with investing in individual stocks.
2. Liquidity: Stock indices are characterized by high liquidity, facilitating seamless buying and selling on major stock exchanges.
3. Accessibility: Stock indices offer individual investors a convenient means of entering the market without the need to invest in individual stocks.
4. Lower Transaction Costs: Trading stock indices typically incurs lower transaction costs compared to trading individual stocks.
5. Performance Tracking: Stock indices serve as benchmarks for monitoring overall market performance, simplifying the task of tracking portfolio performance.
6. Reduced Volatility: Stock indices generally exhibit less volatility than individual stocks, making them an attractive option for risk-averse investors.
2. Liquidity: Stock indices are characterized by high liquidity, facilitating seamless buying and selling on major stock exchanges.
3. Accessibility: Stock indices offer individual investors a convenient means of entering the market without the need to invest in individual stocks.
4. Lower Transaction Costs: Trading stock indices typically incurs lower transaction costs compared to trading individual stocks.
5. Performance Tracking: Stock indices serve as benchmarks for monitoring overall market performance, simplifying the task of tracking portfolio performance.
6. Reduced Volatility: Stock indices generally exhibit less volatility than individual stocks, making them an attractive option for risk-averse investors.