Here Is the Best Investment Tip You Will Ever Read

Here is the best investment tip you will ever read: You are much better off by investing in a low-cost index fund than owning an active mutual fund or hedge fund. Kim Ishyan writes on TheStreet: “Every year, Standard and Poor’s publishes a scorecard showing how many fund managers beat various stock market indices around the world. And every year the fund managers lose. Last year’s scorecard showed that 84% of U.S. equity fund managers could not beat the market over the previous five years. Eighty-two percent could not do it over a 10-year period… It’s true some fund managers can beat the index from time to time (and these managers’ marketing departments let everybody know when they do). Some can even beat the index for a few years in a row. But there are almost none that can do it consistently. The managers that on occasion beat their benchmark index are probably just lucky.” Even the legendary investor Warren Buffett embraces this view on the money he’ll leave behind for his wife: “My advice to the trustee couldn’t be more simple: Put 10% of the cash in short-term government bonds and 90% in a very low-cost S&P 500 index fund. (I suggest Vanguard’s.) I believe the trust’s long-term results from this policy will be superior to those attained by most investors — whether pension funds, institutions or individuals — who employ high-fee managers.” (thestreet.com)