Index Funds: Once boring, now sexy… what a shame

 

Let’s face it, our investments should be boring, money invested in the stock market shouldn’t be thought in the same way that money “invested” in a casino gambling is. Gambling offers a thrill, you might win a lot of money quickly. Unfortunately, that’s sort of how people invest their money in the stock market too.

If you look at fund flows, you’ll see that when the market dips, as it did early last year, money pours out of index funds — only to pour back in once the market is climbing again. In other words, just as they had in the days of hot funds and hot stocks, too many investors are buying high and selling low. Except this time, they are doing it with index funds.

source: Bloomberg

While we mentioned that there are fund managers who outperform the market, it’s hard to believe that they’ll be able to keep it up. Most people are better off putting their money in index funds and then just leaving the money alone; don’t try to time the market, just let it grow. Add to it periodically, whenever you can.

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