3 Reasons to Passively Invest in The Market (without trying to beat it)‼️

(don’t forget to checkout the video of this blog too)

I know how alluring investments can be.

Especially the idea of an “active” investment manager beating the market year after year.

But unfortunately, the investment professionals trying to beat the market rarely do.

That’s why passively investing in the market with index funds is typically a better long-term retirement strategy (that is much more cost-effective).

Here are 3 reasons to focus on passive (index fund) investments:

✅ Instant Diversification

Index funds track indices (makes sense, right⁉️)

So if you buy an index fund that tracks the S&P 500 you are immediately diversified with 500 different companies in your portfolio.

So you’re able to participate in the growth of these companies with very little risk.

If any of these companies don’t do well they are typically replaced with a new company (almost a form of active management without having to pay for it).

So rather than trying to pick a bunch of stocks you can just buy them through an index fund (and the index itself to manage your portfolio for you).

✅ Low Costs

This one is my absolute favorite benefits (especially for everybody saving for retirement).

High fees do not generate better returns…

In fact, it’s been shown time and time again in investment research that you are NOT usually getting what you pay for (in paying more for investment management).

And the true cost of your investments over your lifetime will drastically impact your future retirement income.

In fact, paying 1% per year in unnecessary fees can cut your retirement portfolio by 25%!

And most actively managed investments charge more than 1%….

Index funds typically cost between 0.05% and 0.10% each year.

So you’re often getting better performance AND a 10–20x lower overall annual cost.

Index funds also help keep capital gains taxes lower (if not held in retirement accounts) since stocks aren’t constantly being bought and sold like they are in managed portfolios.

✅ Better Returns

Warren Buffett made a famous $1M bet that the S&P 500 would beat the returns of an actively managed hedge fund over 10 years…

He won in a landslide in 2007‼️

That’s because he knows that only about 23% of actively managed funds beat index funds over a 5-year period. ❌

Now stretch that over a longer period, like saving for retirement, and it’s even more certain that the index funds will outperform their expensive counterpart. 👏👏👏

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