It’s hard enough to save for a house, tuition or retirement. So why are so many Americans willing to pay big fees for subpar investment returns? In this Freakonomics podcast, experts explore the flaws of active investing and the superiority of the low-cost index fund.
Beating par in golf is extremely difficult—even for elite pros. It’s the same in investing. With golf’s US Open Championship underway, Vista’s Dougal Williams reminds readers that when it comes to long-term investing, par wins.
According to Princeton professor of economics, Burton Malkiel, “there is no better way for individuals to invest in the stock market and save for retirement.” (subscription required)
Despite passive investing’s incredible recent growth, there are several reasons we’re not concerned with indexing becoming too popular.
It’s been 25 years since Professors Eugene Fama and Ken French explained why investors were likely, but not guaranteed, to earn better returns by favoring small cap and value stocks. Results since then have validated the researchers’ conclusions, but capturing those higher returns hasn’t always been easy.
The endowment performance of tiny Houghton College recently outpaced that of Harvard, which boasts the largest university endowment in the country. How did Houghton do it? By avoiding hedge funds and exotic alternatives, and instead embracing low-cost index funds.