Investing in broad-based index funds gives you superior returns, NOT average returns

Selecting funds that will significantly exceed market returns… is a loser's gameJohn C. Bogle KEY TAKEAWAYS A broad-based index fund mimics the performance of the index. However, contrary to popular interpretation, it is not a reflection of the average investor return in the market. Passive investing in broad-based index funds, over the long term, generates returns superior to those achievable by most active investment professionals Passive investing also outperforms actively investing in index funds (timing the market, waiting for the…

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Investment portfolios should be simple and boring

Simple can be harder than complex. You have to get your thinking clean to make it simple Steve Jobs Key Takeaways The overwhelming majority of investors are best served by a simple and boring Boglehead portfolio, consisting of just 1-3 broad-based market index funds A simple and boring portfolio provides a near-guaranteed 10-12% annual return in the long-term, for virtually zero effort Chasing alpha through individual stock picking or excessive diversification increases decision fatigue, raises the risk of errors, and…

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