Monday, December 7, 2009

Index funds win again

It is my belief, and many others, that a low cost index fund portfolio will beat an actively managed one. This is what I base my portfolio on.

I consider myself a pretty lucky person, but I do not think I am lucky enough to win against a stacked deck. The stacked deck in this case are the lower returns you will get from a higher cost fund. It's just not worth it!

"They found that outside the top 3% of funds, active management lags results that would be delivered due simply to chance."

 Image: © 2009 TNT Fireworks, Inc.

"Investors who continue to send money to actively managed mutual funds in the hope that managers will be able to beat less-costly index funds are going to lose out almost all of the time, a new study finds."

Another great example of why it makes a whole lot of sense to have a foundation of index funds, instead of relying on a lucky strike against a stacked deck.

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