Posted on 03/24/2025 8:43:28 AM PDT by JSM_Liberty
They also tend to have lower expenses.
The stock market is a vehicle by which money is transferred from those without patience to those with patience.
Sound advice for anyone at any time - IMHO.
I would add that patience plus diversification are needed ingredients for success in the market.
“The stock market is a vehicle by which money is transferred from those without patience to those with patience.”
Truth, and the temptation to trade never goes away.
My portfolio has outperformed the market over the past 25 years by a substantial amount. I own 15 stocks, all of them household names (Coke, PG, Morgan Stanley, Aflac) that pay dividends and increase their dividends every year. When I have $$ to invest, I look at the 2 or 3 stocks in the portfolio that are getting hammered, and I invest in those stocks. Unlike actively managed funds, I don’t have to worry about a Morningstar rating. That’s why these funds underperform the average, i.e., b/c fund managers need short term results, so they join the investment pack, resulting in average returns, which become below average when their 2% cut is taken out. By contrast, I put my $$ in beaten down stocks (which have decades-long track records of delivering returns), and I can patiently wait for them to recover and prosper. Or, more simply, buy low and don’t sell.
Avoid expensive fees and you are far ahead no matter what your strategy:
https://www.reddit.com/r/Bogleheads/comments/pjxu6t/pay_attention_to_fees/
Buffett’s investment advice to his wife when he passes: 10% short term govt bonds; 90% S&P 500 fund.
Sound advice for anyone at any time - IMHO.
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The best investment advice is to not buy mutual funds, unless you are absolutely uninterested in managing your own money. These funds take almost 2% off the top, which makes it virtually impossible to outperform the market over time. I own 15 stocks through DRIPs(Dividend Reinvestment Plans), all of which are blue chip. Mutual fund managers, in order to keep up their ratings, have to join the pack, so they buy what everyone else is buying. By contrast, I dump $$ into the 2 or 3 of my worst performing blue chip stocks and can wait for the turn around. My portfolio is simple and, over time, has significantly outperformed the S & P and DJIA. Buy, never sell, and reinvest the dividends.
Avoid expensive fees and you are far ahead no matter what your strategy.
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Agreed. However, even unsophisticated investors (like me) can make a lot more money by owning their own stocks. The key is to buy stocks that have raised their dividends for decades. If a stock always raises its dividend, its value must go up, b/c investors will buy the stock for the higher dividend payment and also b/c the company must be fairly consistently raising its profits. I bought Exxon at around $30/share (with a 10% yield) during COVID, when everybody was telling us it was the end of Big Oil. I’ve made an annual 10% return for 3 plus years in the form of dividend checks, and the stock is sitting around $115/share now. A mutual fund manager would not have taken this risk, b/c they need short-term gains.
“These funds take almost 2% off the top,”
Index funds expense ratios are about a tenth of that
Vanguard VOO (S&P500 etf) expense ratio: 0.03%
I see you enjoy managing stocks. Many like myself, appreciate the instant diversification an S&P 500 fund offers. It's not sexy, but for those who prefer not managing individual stocks, it's a easy choice.
Both are right. Many 401k offerings don’t include the dividend champions, so a general index may suffice.
No matter how nice your company it seems wise to also try and have a separate fund esp with how many low-cost brokers are around. A bort strategy or just a low-load fund of dividend payers (e.g. VYM) is not exciting but adds up if you “DRIP” it into itself.
(disclosure: I don’t own VYM. I picked it as an example because it’s not one I own. Do your own homework please.)
Managed funds are a waste of good money. This report proves it again. The managers are not worth what they are paid.
Lower? Closer to NOer expenses by comparison. MF managers don’t earn their keep.
You don’t get much more diverse than a market ETF.
Dividend Aristocrats.
There are no brokers or advisors that do not have a conflict of interest. NONE.
Agreed—the entire “investment advisor/management industry” is a total joke.
The only exception I would make is that high net worth/income individuals with major tax issues probably should hire an advisor on tax strategy—and pay them by the hour for a periodic review.
“many active managers argue that the future will be different”
And how long have they been saying this? About as long as there have been index funds from what I have seen.
bfl
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