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Save your investment dollars -- invest in indexes

Posted by billspaced | 3:08 AM | , | 0 comments »

If you've read any of my recommended books or my links to the right, you have gotten the impression that I invest my time in sensible resources and my money in index funds. Why index funds?

Because they're cheap. And so am I. Generally, index funds offer the lowest loads available. This is directly related to the fact that index funds aren't "managed" in the traditional sense. Take a look at the Vanguard family of funds and you will see how cheap these funds can be.

Besides being cheap, they're an easy way to "match the market." While many people, including highly-paid investment advisers and fund managers, try to beat the market, most of them fail. Sure, in any given year, many mutual funds beat the market. But how many consistently do this? The fact is that the funds that beat the market change every year.

Index funds are the market. No sense in trying to beat the market when you can buy it. Investment gurus like John Bogle and Andrew Tobias are staunch supporters of investing in indexes. Heed their advice: It's prudent, cheap, and will allow you to sleep at night, knowing that you'll be matching the market with little active management on your part.

The link below will take you to an article about index investing. It's one of many good articles on the topic.

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