The S&P 500 has a compound annual growth rate of 9.94 % since 1970, so it would seem that it could be easy to
buy a low fee index fund and make more than 2.875 %.
If you are not willing to do the work or feel like you have the wrong emotional temperament,
buy low fee index funds.
Unfortunately any investor must still choose how to diversify, so they still must learn to make sound investing decisions (portfolio asset allocation requires that an investor actively make certain choices even if it is to
buy low fee index funds / ETfs).
Not exact matches
Porter tells potential clients that he focuses on not guessing the market by
buying index funds that
buy broad swaths of the market; keeping costs as
low as possible, such as fewer transaction costs and not paying analyst
fees; and focusing on tax efficiency, by relocating assets from tax - inefficient types of investments to tax - advantaged accounts.
The average investor just wants to
buy the
low cost
indices (keeping
fees low) of his choice, regularly invest some savings, compound it all for 20 years, rebalance regularly and hopefully then if the world still exists retire with a little nest egg that s / he can draw down.
For example, you can
buy shares in an exchange - traded fund (ETF) that mirrors the S&P 500
index for a
low commission and a management
fee below 0.10 percent.
In fact, ETF investors may be interested to learn that the iShares S&P / TSX 60
Index ETF is a good
low -
fee way to
buy the top stocks on the TSX.
Since
indexing is all about capturing an asset class's returns at the
lowest possible cost, does it make sense to simply
buy all (or most) of the REITs in these funds directly and avoid management
fees altogether?
From my understanding, it is conventional wisdom that if a person wishes to invest in the stock market but does not have the time or aptitude to evaluate individual stocks and time the market, he should invest only in no - load,
low -
fee mutual
index funds, using a dollar - cost averaging strategy in a
buy - and - hold fashion.
The lazy way to dividend riches If you've settled on following a dividend oriented - strategy but you're not quite ready to dive in and
buy individual stocks, then opting for
low -
fee dividend ETFs or
index funds is a great no - fuss way to enjoy the benefits of dividend investing.
If you are willing to manually rebalance your share portfolio, Moneystepper would suggest that
low - cost
index tracking funds or ETFs,
bought for the very long - term through direct online brokers will incur the
lowest fees.
Most muppets should keep it simple and
buy a broad diversified bond fund with
low fees like Vanguard's Total Bond Market
Index.
Index funds
buy and hold stocks and there's no need for a well - paid fund manager, so operation
fees and investment costs are
lower.
And since they have
low management
fees,
index funds are often considered to be an important part of a long - term investment portfolio because they require very little activity on your part other than
buying and holding.
Since
index funds simply
buy the stocks or bonds that make up
indexes like the Standard & Poor's 500 or Barclays U.S. Aggregate bond
index rather than spend millions on costly research and manpower to identify which securities might perform best, they're able to pass those savings along to shareholders in the form of
lower annual
fees, which translates to higher returns and more wealth over the long term.
The debate, in a nutshell, goes something like this: Why pay higher
fees for an actively managed fund that has a shot at posting much bigger returns than the
index it's measured against but which also runs the risk of posting smaller returns, when you can
buy a
low - cost
index fund, such as those that track the performance of the S&P 500
index, which pretty much guarantees that your returns will be in line with the
index?
If you can't handle mistakes, Munger suggests that you
buy a diversified portfolio of
low fee index funds and leave active investing to others.
For such investors,
buying a collection of
low -
fee index funds could be just the thing.
Thus I say it is better to be disciplined, and
buy and hold a volatile investment with
low fees over time, rather than own an
indexed annuity that will tend to lock you in, and deliver
lower returns on average.
I don't know much about fundadvice.com, but it makes sense that they should
buy something simple like
index funds with
low low fees and decent enough returns.
ISHARES S&P / TSX 60
INDEX ETF (Toronto symbol XIU; ca.ishares.com) is a good
low -
fee way to
buy the top stocks on the TSX.
Furthermore, to amortize these brokerage transactions costs only
buy broadly diversified, very
low fee,
index ETFs that you intend to hold for a long time.
They could offer the
lowest cost Canadian
index, and give our market some much needed competition to
lower fees and give the average investor good advise like
buy a
low cost
index fund and hold it.
«Look for
low fees and if you're
buying an actively managed mutual fund, you want to be sure it's a truly active fund and not a closet
index fund,» says Jason Heath, a financial planner Objective Financial Partners in Toronto.
If you want average performance, which is better than most get,
buy a broad
index fund with
low fees and hold it.
I have said many times in this series on my blog: most people should
buy a diversified portfolio of
low fee index funds / ETFs.
You pay more to
buy these funds and you pay more in the long run, because mutual funds with sales loads and 12b1
fees are more likely to come up short in comparison with
low cost no load
index funds.