Expert Advisors vs. DIY: ETFs for Long-Term Success
Studies have proven that investment experts have not been able to consistently beat the market. Exchange Traded Funds (ETFs) won’t beat the market, but they will match it and make you money over the long haul.
Prophets And Profiteering
Are you invested in an actively managed fund? Can you really do better with an expert advisor? The odds are stacked against them. They have to beat the market by at least their management fee and then some, to keep you believing they can do so much better. To beat the market takes superhuman insight, a sixth sense similar to being able to know the future.
It has happened in very rare circumstances – the best example is Peter Lynch. If you think you can find the next Peter Lynch and outperform the world, so be it. Ironically even Peter Lynch states most people could have done just as well by investing in a low fee balanced index market fund.
The Safer Way to Invest
I prefer to make my gains in a much safer way. By managing my funds myself, and using low cost exchange trade funds (ETF’s), I save up to 3% in fees. That puts me much further ahead than the most talented fund manager.
This makes it nearly impossible for anyone to beat my performance consistently over the long term (10+ years). I’m quite happy to accept that I can’t predict the future direction of the markets, individual stocks, bonds, or any sector. I’m not willing to bet on someone who believes they can.
Gamblers Lose
Would you give your money to a gambling expert and ask them to go to a casino and make you money? What if they assured you they could predict the next card, roll of the dice, or spin of the wheel? Even the most talented gambler will win some, lose some. Regardless of the outcome never forget that the advisor still collects their fee.
In my E-books (“Water Barrel” and “The Balance”) I discuss simple methods to live sensibly for today, take charge of your financial affairs, and invest safely for the long term. For more information please visit David Penna Amazon.
As always, I am not a qualified financial advisor. I just relate financial management to my own experience which may not resemble yours at all. Advice is frequently worth exactly what you paid for it. Most of mine came from expensive experiences.