3 Reasons Why Low-Cost Index Funds Are King

Here are three reasons why low-cost index funds are king. I’m Tyler, a former financial advisor and portfolio manager, and now I create financial content for free to guide your investment journey.

1. Control the Costs

In investing, we control what we can control, and index funds have the lowest fees in the industry. You can find funds for less than 0.1% annually, which means more of your money stays invested and working for you.

2. Built-In Diversification

Index funds offer built-in diversification, containing hundreds to thousands of stocks within one fund. While this doesn’t diversify between asset classes, it does help mitigate individual business risk and unsystematic risk.

3. Proven Performance

Finally, index funds have proven performance. Over the long haul, active portfolio managers—including yours truly—cannot beat these funds after accounting for fees. In fact, historically, only about 10 actively managed funds consistently outperform, and 7 of those require investments that you couldn’t afford, while 3 are currently in jail for running Ponzi schemes.

If any of this information is helpful, please like and follow, and I’ll keep sharing insights to help you get one step closer to where you need to be.

Source