Please enable JavaScript.
Coggle requires JavaScript to display documents.
Active vs. Passive Investment (Index Funds | Passive But Stable Advice…
Active vs. Passive Investment
Index Funds | Passive But Stable
Advice from Boyle
Big, boring index funds is the way to go.
Also known as SNP500; mirrors stock market
If you do the index fund, you get the market return.
Perscribed to own 1 balance index fund; reasonable to put it all in 1 fund;
If younger, 80-85% equities; if older 25% equities and the rest bonds
Look for very low turnover, tenured leadership, etc.
Very simple conceptually; you can match the index rate easily.
"Every investor is an indexer." Bogle
Individuals should abstain from buying stocks. You need to put money in an index fund and don't do anything else for 5 years. Then, see what happens and do another 5 years. You only buy stock when you have a serious money account.
Mutual Funds | Active & Diversify
Advice from Ramsey
Invest in 4 different types of mutual funds--growth, growth and income, aggressive growth, & international. The name tells you what is in the fund.
Growth |
also known as "mid-cap"; right in the middle of the SNP500; standard growth stock mutual funds; find ones that outshine SNP500
Growth & Income |
Also known as "large cap fund" or "blue chip fund"; these are the big companies; most boring of all mutual funds because they are the calmest. They are stable. They go slower than the market, regardless of its direction.
Aggressive Growth |
also known as "small cap"; this is the wild one; it is much more volitale than the stock market; start up companies; tech companies
International |
Good to have funds in companies based internationally; worst performing of the four; cousin is the global fund which will outshine international
When choosing mutual funds: look at the rate of return; look for the longest track record of success; look for something stable
All the data says a good mutual fund wins.
Financial Considerations | Regardless of Choice
You have to establish maturity and income. You have to determine how you balance risk and returns. Don't invest in what you don't understand.
Financial Advisors |
If you need help, it is worth it. Be careful that you are not taken advantage of, but it is important to have someone helping you who understands the process.
Boyle did not like the loaded mutual fund option. Ramsey, however, argued for it for the purpose of having someone involved who knows what they are doing.
The main thing is: DO IT
If you don't invest, you get nothing.
There is a diminishment of long term investment as a principle. Invest and be willing to ride out the wave of the market. Don't jump in and out. Give it time.