Outperform The Pros by Caring Just a Tiny Bit

 

Do you care about your investments? Most people think they do but I don't think they really care that much. I've met more people over the last couple years who don't know what they're invested in, what their returns have been and what they're paying in fees.

 

If this sounds like you that's perfectly fine and it's nothing to be ashamed of. You're not alone. But, if you just cared even a tiny bit you could save 2 to 3 percent in fees and outperform the majority of actively managed funds. That's right. Just by caring a little you can do better than the majority of professional fund managers by purchasing low cost Index Exchange Traded Funds (ETFs).

 

Investing Legends Agree...

 

Need some reassurance that indexing works? Even the Oracle himself - Warren Buffett believes in indexing - Warren Buffett to heirs: Put my estate in index funds. A couple other investment legends also agree - Investing pros John Bogle, Warren Buffett and Charlie Munger all agree on the best way for the average person to invest.

 

Another example of how low cost ETFs are better than most active managers:  Low-Fee Investment Funds Aren't Just Good For Your Savings, They Perform Better Too

 

Save Big On Fees...

 

Do you know that Canadian's pay the highest investment fees on the planet? Here are a couple of articles on the topic: Canada trails pack on fund fees and Investment fees are too high, and it's up to us to change that.

 

Why not index and save $1000's in fees? Or maybe even 10's of thousands in fees over the course of a couple decades. What are you paying for anyway? The math is simple and explained in a past blog post - Got Mutual Funds? 4 Questions You Should Be Asking.

 

With the creation of ETFs you can now get exposure to equities and pay less than 0.5% in fees. A significant savings when compared to traditional mutual funds that charge between 2 to 3 percent. Not to mention that most consistently under-perform their benchmarks.

 

How Do You Do It?

 

Indexing or creating a portfolio of ETFs is not difficult but you do have to care a little bit. This means spending some time educating yourself on what ETFs best track the market(s) that you'd like exposure to.

 

For example if you want exposure to one of the most widely followed equity indexes on the planet, the S&P 500, there's an index fund that tracks its performance (SPY). As an example the S&P 500 is up over 200% since bottoming in 2009. Doing this eliminates the time and effort of trying to pick stocks or mutual funds that you think will perform best. Because the truth is most funds and active managers will never outperform an index like the S&P 500 over the long term.

 

Be the market and forget about being a stock picker, especially if you don't have the time or knowledge to choose stocks on your own.

 

Are you going to continue to pay the highest fees in the world for constant under-performance and lack of service? Maybe it's time you start to care a tiny bit and take control of your investments.