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How to invest in the S&P/CLX IPSA Index
Chile’s Índice de Precio Selectivo de Acciones (also known as the S&P/CLX IPSA Index) provides a great investment opportunity. There are multiple ways to invest in this index, so we’ve created this page as a guide to help you through the process.
Where can I buy into the S&P/CLX IPSA Index?
What is the S&P/CLX IPSA Index?
It is a Chilean stock index of the 40 most-traded stocks listed on the Santiago Stock Exchange. Launched in 1977, the index includes a wide range of blue-chip stocks, with companies from the banking, real estate, telecommunications, mining, and other industries.
Is it a good investment?
It can be, but it depends on if investing in this particular index works for your investment strategy. Chile saw 4% GDP growth in 2018, ranking among the most robust figures anywhere in Latin America. Growth cooled somewhat in 2019 due to nationwide protests, and as of early 2020 the global COVID-19 lockdown has caused economic difficulties across the world. Still, the fundamentals could be there for a rebound, once the pandemic eases and Chile’s economy could start to grow faster than before. Wait for the right market conditions before investing, as bear markets hit indices hard.
How do I invest in the S&P/CLX IPSA Index?
If you want to invest, follow these three steps:
- Choose an investment type
- Use our top tips to succeed
- Choose a platform to invest with
1. Choose investment type
The investment type you choose should match up with your personal investment goals. You might choose one investment type based on low transaction fees or another based on the quality of the investment advice you want to receive. Here’s a look at the different methods you can use to invest:
An ETF (exchange-traded fund) is an investment fund made up of a variety of assets (e.g. commodities, bonds, or the stocks tracked by a specific index) that can be traded on a stock exchange. Much like an individual stock, you can buy and trade ETFs during regular stock market hours, which you can’t do when trading certain other financial products. ETFs are inexpensive to trade, which is another major advantage.
Another investment strategy is to buy lots of individual stocks within the index in separate trades, then sell those stocks one by one to reduce your portfolio, until you’re left with a smaller group of top holdings. This investing method takes more time and incurs extra trading fees, but it can be rewarding in the long term. It’s usually inadvisable to take this approach with huge indices with lots of listings, however as this index tracks only 40 stocks, this approach is a realistic option to consider.
A mutual fund is an investment fund run by a professional money manager, which you can buy through the broker or the company that administers the fund. An index mutual fund (also known as an index fund) enables you to invest in all of the S&P/CLX IPSA Index’s stocks at once, just as you would with an ETF. ETFs beat mutual funds in multiple ways, though. Mutual funds can only be bought and sold at the end of the stock market’s trading day, and they cost more to trade and to own than ETFs do. Mutual funds make the most sense if you are looking to buy and hold an investment for the long-term, with ETFs better suited to quick trading strategies.
2. Use our top tips to be a successful investor
The best way to invest in any index is to map out an investment plan ahead of time. Check out some of our other top tips to become a successful investor:
- Do your research. Becoming a highly successful investor takes lots of patience, and study. Start by studying how the index in question has performed both recently and historically to get an idea of what gains you’re likely to see. Then compare how investing in this index stacks up to other investments. After that, figure out your goals, so you’ll know ahead of time if you want to buy and hold for the long term, or go for quicker gains.
- Set a budget. Letting your losses spiral out of control can damage your confidence and your ability to afford to make future trades. You need to figure out your personal risk tolerance and the amount of money you can afford to lose. To manage your risk, set a stop-loss order after you make your investment. This allows you to limit the size of your potential loss if your investment in the index doesn’t go your way – maintaining your budget and keeping you in the game even if the market falls sharply.
- Select the right platform. The investing platform you pick should complement your investment goals. If you care primarily about getting the lowest transaction fees, that’s a very different goal than desiring top-notch investment advice. It’s best to sort all of that out before you select the platform you want to use to invest.
- Grow your investments gradually. You’re going to make a lot of mistakes when you’re just starting out as an investor. So start slowly by investing just a small amount of money at first. You can always get more aggressive with your investment approach as you get better and more experienced at investing.
- Think long-term. If you want to land big gains when investing, a buy-and-hold approach could be your best bet. Just make sure to try that approach during bull markets, as bear markets often lead to very big losses.
3. Choose a platform to invest with
The most popular places to invest in an index are detailed below:
- Brokers & trading platforms. When trading with an online broker, you gain the benefit of easy-to-use investing tools that allow you to trade quickly and inexpensively. If you’re a self-starter, this will likely be the most advantageous trading method for you. If you want more help, though, you might want to try a different approach. Online brokers don’t provide much in the way of personally customised investment advice.
- Robo advisors. Robo advisors execute trades automatically, through the use of algorithms. In addition to offering this low-cost automated function, some robo advisors will also allow you to discuss your investment strategy with a human being. Robo advisors don’t usually offer the same level of investment guidance that a top financial advisor does, though.
- Financial advisors. Financial advisors provide the highest level of investment advice. They’ll sit down with you, go over your financial goals, explain various investment options, and help you build an investment plan that suits your particular set of circumstances. This does come at a cost, however; financial advisors typically charge more for their services than what you’ll pay when using other methods. That extra cost can sometimes be worth it, but likely not when investing in this index, since it’s an easy process to handle yourself.
- Banks. Investing with your bank gives you the added convenience of keeping all of your financial ventures (such as your checking account, savings account, mortgage, line of credit, and investments) with one financial institution. The problem is that banks tend to charge high fees for this convenience, without providing the level of service that financial advisors offer. So unless convenience is your most important consideration, it would probably be best to look elsewhere.
Ready? Here’s our top recommended broker
What should I do now?
Log into your online broker’s website, select the type of investment you want to make in the S&P/CLX IPSA Index, then click buy. After that, keep tabs on your investment. Doing this will enable you to make informed decisions about whether to hold or sell your investment, depending on how the market is performing.
Try some of our investment courses for beginners
Not yet ready to invest just yet? That’s ok. Hone your investing skills by reading the easy-to-understand investing courses and informative news updates that we offer on this site.
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Fact-checking & references
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Invezz is a place where people can find reliable, unbiased information about finance, trading, and investing – but we do not offer financial advice and users should always carry out their own research. The assets covered on this website, including stocks, cryptocurrencies, and commodities can be highly volatile and new investors often lose money. Success in the financial markets is not guaranteed, and users should never invest more than they can afford to lose. You should consider your own personal circumstances and take the time to explore all your options before making any investment. Read our risk disclaimer >