What is the best type of investment, long term?

May 4th, 2007|| · No Comments ·

Mark Dowie of the San Francisco magazine writes that “for 35 years Bay Area finance revolutionaries have been pushing a personal finance strategy that brokers despise and hope you ignore”.

What is it? Index Funds.

What do the experts say

Nobel Prize winning economist Bill Sharpe, from Stanford University, sums it up quite simply “don’t try to beat the market.”

Former dean of Yale school of management, now a professor of economics at Princeton and author of A Random Walk down Wall Street, Burton Malkiel, says “a blindfolded monkey will, in the long run, have as much luck picking a winning investment portfolio as a professional money manager.. Don’t try to beat the market.. And don’t believe anyone who tells you they can.”

John Bogle, author of The Battle for the soul of Capitalism, “The modern American financial system is undermining our highest social ideals, damaging investors’ trust in the markets, and robbing them of trillions.” and that mutual funds are based around “salesmanship rather than stewardship, which “places the interests of managers ahead of the interests of shareholders,” and is the consummate example of capitalism gone awry.”

New York attorney general Eliot Spitzer described them as nothing more than “a giant fleecing machine.”

Lower Fees, Better Return

Because Indexed Mutual funds are essentially “passive” investments they charge a significantly lower management fee. And according to Bill Sharpe will “make you just as much money (if not more) at much less cost by following the markets natural ebb and flow”.

Index Funds recommended to Google employees —> here.


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