Editing Index fund (section)

==Asset allocation and achieving balance==
{{main|Asset allocation}}

[[Asset allocation]] is the process of determining the mix of [[stock]]s, [[Bond (finance)|bonds]] and other classes of investable assets to match the investor's risk capacity, which includes attitude towards risk, net income, net worth, knowledge about investing concepts, and time horizon. Index funds capture asset classes in a low-cost and tax-efficient manner and are used to design balanced portfolios.

A combination of various index mutual funds or ETFs could be used to implement a full range of investment policies from low to high risk.