Image source Motley Fool
As stated before in my post on Index Funds vs Actively Managed Funds, Warren Buffett bet that a simple S&P 500 Index Fund would outperform several hedge (active) funds over the next decade. We already knew in early 2017 that it was a certainty that Buffett would win big but it is now official! During that time the 1 million dollars has grown to 2.2 million and Buffett is handing it over to charity. His greatest charitable gift in this case was showing the world that the average investor should invest in Index Funds and let the stock market do the rest!
The Motley Fool did an excellent article explaining the winnings and mindset of Buffett, which if you want to read can be found . Don’t have time to read the full article? Than at least just read this excerpt!
“First of all, Buffett is not suggesting that all investors should go sell their stock holdings and buy passive index funds. Buffett doesn’t necessarily have anything against stock picking if you have the time, knowledge, desire, and discipline to do it properly. However, the majority of people don’t, which is why Buffett has said that index funds are the best investment most Americans can make.
Buffett’s issue isn’t with individual stocks. Rather, it’s with actively managed funds, particularly those that charge high fees, like hedge funds. Buffett acknowledges that in any given year, some fund managers will certainly beat the market. On the other hand, some will lose to the market. And since all of these funds charge fees, investors are at an inherent disadvantage, especially over the long run.” Matthew Frankel (the motley fool)
Investors are at an inherent disadvantage.
Broken down enough? Look at the funds you’re in whether it be in a 401k, 457b, 403b, brokerage account, simple IRA or Roth IRA; Index Fund alternatives are there and waiting to help you achieve you financial goals!