Look For The Best Tracker Funds

Okay, not so much a money saving tip, but more of a way to allow the money you have saved to grow.

An index tracker is an investment fund which buys shares in a basket of companies chosen to track a certain index such as the FTSE100 or Dow Jones for instance. Any dividends paid out are reinvested in the fund. In general there are no expensive fund managers to pay as in some of the other active funds available, because all the buying and selling is simply done to track the index. Typical charges in a tracker go no higher than 1% compared to about 5% in an active fund.

An index tracker takes the view that it makes no sense to try to beat the market and in fact other funds will not generally outperform the market. Even if they do outperform the market in one year it is a toss-up whether they will do so in the next year.

Most trackers allow you to invest a lump sum and then a monthly premium thereafter.

Although history shows that equities generally outperform money invested in bank accounts be advised that trackers do invest in equities which can rise and fall in value. You could be left with less money than you invested. Make sure you understand the risks involved before you invest.

Compare tracker funds on the internet.



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