How to invest in the SSE Composite Index
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Investing in the SSE Composite Index is a great way to benefit from upswings in the Chinese economy. There are numerous ways to get involved, so we’ve compiled this page to guide you through your SSE Composite investment options. To help you make better investment decisions, we’ll explain the entire process, step by step.
Where can I buy into the SSE Composite Index?
What is the SSE Composite Index?
The SSE Composite Index (often called the SSE index for short) is an index of all the stocks traded on the Shanghai Stock Exchange. Much like the NYSE Composite Index, the SSE Index is widely used as the indicator for the overall performance of its underlying stock market (in this case the Shanghai Stock Exchange).
Is it a good investment?
That depends on how keen you are to invest in China’s economy, but it definitely can be. China’s GDP grew by a massive 6.1% in 2019, one of the largest figures in the world, before being hit hard as the country saw the emergence of the COVID-19 pandemic which soon spread across the world. It still remains unclear exactly what the long-term impacts of the coronavirus will be on the performance of the Shanghai Stock Exchange and its related indexes.
Still, China’s growth fundamentals were strong before COVID-19 hit, and the SSE contains a large number of established and fast-growing companies. So on balance investing in the SSE index still seems like a good investment opportunity, as many of the companies tracked by it will be in good shape to bounce back as China’s economy starts to rise again.
How do I invest in the SSE Composite Index?
Below, we’ll take you through three steps that we recommend when investing. They are as follows:
- 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 make sense relative to your specific investment goals. Here’s a look at the different investment types you can use to invest:
ETFs
An ETF (which stands for exchange-traded fund) is an investment fund that can be traded on a stock exchange during regular stock market hours, the same way you would trade an individual stock. ETFs are relatively inexpensive to trade compared to some other investment types and offer a good degree of diversification and flexibility. They can include different groups of assets, such as bonds and commodities, or in this case, an ETF can be structured to be made up of the stocks in an index.
Individual stocks
The most selective investors can opt to buy lots of individual stocks (or even all of the stocks) within the index, in separate trades. The idea would be to gradually sell the worst-performing stocks one by one until you’re left with a small group of top performers. The thing is, unless you can afford to spend a lot of time and money, this investing method could prove to be too taxing to undertake as there are a large number of stocks tracked by the index.
Mutual funds
An index mutual fund (also known as an index fund) is an investment fund run by a professional money manager that pools money from a variety of investors, then combines that capital to make investments, such as tracking the SSE Composite’s performance. Mutual funds can only be bought or sold at the end of the stock market’s trading day, and they cost more to trade and to own than ETFs do – so if you’re looking for flexibility, it’s best to go with an ETF. Mutual funds are generally best suited to investors who want to hold their position for a long time to realise larger future gains.
2. Use our top tips to be a successful investor
Here are Invezz.com’s top tips for how to become a successful investor. Keep these in mind whenever making investments – not just when it comes to investing in an index:
- Do your research. Your research can start by looking at how the index or asset has performed in the past, to help predict its future. After that, compare the pluses and minuses of investing as opposed to other investment opportunities. Then, you can map out your personal investment plan, so you can keep emotions such as fear and greed under control, even at market extremes.
- Set a budget. When you set a budget, you should consider how much you can afford to lose before both your confidence and your ability to make future trades gets severely damaged. To manage your risk and limit the size of your losses, you should consider setting a stop-loss order after you make your investment. For example, if you don’t want to lose more than 10% on your trade, you would set your stop-order price at a level 10% below your purchase price. This can help you stay in the game even if the market takes a dive.
- Select the right platform. The investing platform you pick should make sense relative to your investment goals. If you’re most concerned with getting the lowest transaction fees, you should probably choose an online broker. If you want lots of investment advice, consider going with a financial advisor instead.
- Grow your investments gradually. Every investor makes mistakes, and beginners make more mistakes than most. To manage the damage caused by those early mistakes, consider investing just a small amount of money at first. You can always raise the size of your bets as you gain experience and expertise as an investor.
- Think long-term. The best long-term approach for investing is to buy and hold. That strategy can sometimes be easier said than done, as volatile markets can knock the confidence of investors. While bull markets reward a patient buy-and-hold approach, it can be extremely difficult to pull it off during a bear market, with stock prices plunging all around you. Steering clear of bear markets will help you preserve your capital, so you can get your money into the SSE Index at the right time.
3. Choose a platform to invest with
We’ve compiled a rundown of the best places for you to invest, as there are a variety of options open to you:
- Brokers & trading platforms. Online brokers provide easy-to-use investing tools that let you trade quickly and easily. They also offer some of the lowest transaction fees of any investment method and are therefore a popular option for many independent traders. Trading with an online broker works great if you’re a self-driven person with a bit of knowledge about investing. If you want more help and guidance, however, you might want to try a different approach, because online brokers don’t offer customised investment advice.
- Robo advisors. Robo advisors use algorithms to execute trades automatically and can be used to help craft and execute a strategy. They also charge fairly affordable transaction fees, although these are not as low as you’ll find with brokers. As an additional bonus, some trading robots will let you discuss investment strategy with an actual person in order to help you make the most of the platform. Just keep in mind that robo advisors don’t offer the same level of investment guidance that dedicated financial advisors do.
- Financial advisors. Of all these investment options, financial advisors offer the most hands-on support. They’ll work with you to set financial goals, explain the pros and cons of different investment options, and help you build an investment plan that works for you. Financial advisors charge a premium for this high level of service, and so it’s worth considering if you’re willing to pay more for better customer support. Considering that investing in any index nowadays is simple, a financial advisor doesn’t make much sense in this case.
- Banks. If you invest with your bank, you get the benefit of storing all of your financial ventures (such as your checking account, savings account, mortgage, line of credit, and investments) with the same financial institution. The problem is that banks tend to charge high fees, and don’t match the same level of customised service and advice that top financial advisors provide. You can probably do better investing somewhere else unless convenience is your number one priority.
Ready? Here’s our top recommended broker
What should I do now?
Are you ready to start investing? OK! Just log into your chosen platform, pick the type of investment you want to use and click buy.
Try some of our investment courses for beginners
Not yet ready to invest just yet? That’s also fine! Improve your investing skills by checking out the easy-to-understand investing courses and informative news updates offered at Invezz.
Stock Markets 101
Long-term Stock Investing
Short-term Stock Trading
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 >