Hi everyone, I've been investing for about a year now, and I've been investing in individual stocks and REITs. Recently, I've noticed more about how everyone's talking about index funds, but I have a few questions about them.
Firstly, I'm a non-US citizen in Japan, so the best fund available for my situation that I'm interested in is a Japanese index fund roughly translated as "Listed Index Fund TOPIX" by Nikko Asset Management -
http://en.nikkoam.com/exchangetradedfunds/listed-index-fund-topix information in English available here. It's pretty much like an Asian version of Vanguard. However, unlike the US index funds, the Japanese one doesn't generally go up over time, it goes up and down, depending on the year. This includes the base price, as well as the dividend payments.
My first question, and something I'm not clear about, is: isn't it possible for an index fund to fail if the underlying company somehow goes under? I mean, if Vanguard were to go under, wouldn't everybody lose everything? Or would that never happen? What's the difference between Vanguard and Enron (for example)?
My second question, slightly related to my first, is: is it wise to put all of your money into one fund, even if that fund is tracking everything? I think I would be nervous having 50,000 shares of just one fund, and nothing else. Is this fear ungrounded?
I ask these questions because on the surface, index investing seems ideal, simple and beneficial in all ways, but my lack of understanding of the above points makes me hesitant to go for it. Could someone clear this up for me?
Thank you