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Why I don't buy actively managed investments.

posted Aug 10, 2016, 6:47 AM by Tim Isbell
I ran across this chart in a recent Quartz article. It shows the enormous price an investor pays if they miss just a few days in a 20-year span! I cannot predict which days will be this pivotal. Neither can a professional. So I don't use active managers, nor many actively managed funds. Instead, I use mostly index mutual funds. This is called evidence-based, asset allocation investing. For more on this see Asset Allocation Basics.

By the way, the Quartz article is The Case for ETFs in 3 Charts. The chart in this post is the third chart in the article. If you read the full article, note that the second chart may be misleading. While an ETF has lower costs than a "traditional mutual fund," a fairer comparison is an ETF with an index mutual fund where the difference should be much smaller - if any.