Rule #6: Use Index Funds and Passive Investing (video)

The sixth rule is to use index funds. Or most accurately, use passive funds for the lowest possible costs. Usually these are index funds. The secret Wall Street doesn't want you to know: actively managed funds underperform the market. Recent winners make the "recommend" list—but don't pay much attention to that. There are very few that can outperform the market in the long run because of costs. A very few will, but since you can’t choose them in advance—don’t even try.

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