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What do you think about index funds? |
I just finished reading John Bogle's latest book, and he makes a very compelling case for index funds outperforming managed mutual funds over time. Does anybody agree with him? If you're a fan of actively managed funds, tell me why, before I go reset my 401(k) elections! Index funds are an excellent way to increase your wealth over time. They're low maintenance, low cost and you won't lose any sleep over them. Barring any major holocaust or meteor striking the earth, they will increase in value as the market has over the last 100 years. Index funds are inexpensive and represent a particular segment of the market. Broad market index funds usually outperform actively managed index funds. John Bogle founded Vanguard, a solid company with inexpensive mutual funds. But Fidelity's Total Market Fund is less expensive than Vanguard's. I agree with Bogle in theory & I plan to increase my indexed holdings. The exceptions begin when you start looking at "multi-cap" (go-anywhere) funds with good returns and a strong track record - there is no index for a fund that will hold whatever it's manager thinks looks good. There are also other valid & worthwhile ways to park your money, but indexes are a great start. I am sold solidly on index funds. The only real choices are deciding which one is the right one for your purpose. I have read his book alsoand am invested in Vanguard also. I have spent many years watching and listening to people chasing the "big"one,and i don't think much of that. My reasons would just mimic his because he makes a lot of sense to me. There are so many variables involved in the stock market,but one thing seems to be pretty certain. Over a long period of time it tends to average something like 11 or 12 percent increase. You just have to weather through the downs and fight the urge and the advice of others to take a chance. Eventually i will have almost all of my money in index funds. They are great |
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