Passive Investing With Index Funds: The Better Way (video)
Summary of Passive Investing With Index Funds: The Compelling Evidence The Fund Management Industry Would Prefer You Not To See This remarkable 54-minute video is produced by http://sensibleinvesting.tv , an independent voice of passive investing, and features 24 experts from the fund management industry. It is a great honor to include it in our collection of video tutorials about mutual funds. Part 1: The Out-performance Myth About Beating The Stock Market Link down page to transcript about the myth that investment fund managers can produce above-average stock market returns. Regardless the impression they like to give, fund managers regularly produce less than the average market return. Buying and selling shares is little more than a gamble, and strong returns are often down to luck. It’s harder than ever before for a manager to outperform the market consistently. Commercial pressure means fund managers often advertise funds they wouldn’t choose for themselves. And remember, although there are good managers out there, picking the next star manager is almost impossible. Part 2: The Cost of Investing (Watch on video starting at 7:03) Link down page to transcript about the misconception that active fund managers produce returns higher than their costs. Fund managers have large overheads, not the least salaries and bonuses, and you pay the bill. Over time, charges that sound modest can seriously erode your savings. Many of the charges that consumers incur are hidden in the small print. And to add insult to injury fund management charges have been rising year-on-year. Part 3. A Better Alternative To Trying To Beat The Market (Watch on video starting at 13:10) Link down page to transcript about the wealth of evidence that supports passive investing as a better alternative to active investing. Passive investing with index funds is not so much a theory as a massive a mathematical fact. There’s a wealth evidence supporting it including the work Nobel Prize-winning economists. Studies have consistently shown that when costs are factored in passive investing produces better returns than active. Part 4: Ultimate Diversification Also Reduces Your Investment Volatility (Watch on video starting at 20:31) Link down page to transcript of explanation how index funds are the cheapest and most effective way to spread your investment risk. Investing passively with index funds is the cheapest and most effective way to spread your risk. Because their holdings are restricted to a relatively small number of stocks, active equity funds are more volatile than passive ones. Active fund managers charge a premium for funds that invest in more than one asset class. And over the longer term, once charges are taking into account, the passive investor will always fare better the average active investor. Part 5: A Healthier Way To Invest (Watch on video starting at 28:24) Link down page to transcript about how passive investing can also spare you unnecessary stress. Money worries in general, and poor investment decisions in particular, are major causes of stress. Rational analysis produces sensible investment decisions; emotions lead to bad ones. And […]
The post Passive Investing With Index Funds: The Better Way (video) appeared first on Passive Investing With Index Funds: The Better Way (video).
