Opinion on index funds and passive investing?

[Anonymous No.55395593]

At the moment I invest everything into index funds apart from a bit of crypto and gold I own.

It's really boring but Reddit tells me this is the most sensible strategy, and I kind of agree with them.

Don't most people who invest passively outperform the market as opposed to active investing?

What's your opinion on the Boglehead philosophy?

My only problem is the stock market returns histrionically have averaged about 10% per year, and I want to get rich now so I can live according to the 4% rule.

Do I go full degenerate and pick stocks or crypto?

[Anonymous No.55395601]

You pick stock, you forget crypto and avoid fee scams like etfs and indexes

[Anonymous No.55395629]

>>55395601

How do you know what stocks to pick? Most active investors underperform the market.

Having less than about 9 quality stocks is probably best, otherwise if you own too many your returns are going to naturally roughly match the index?

[Anonymous No.55395638]

I use big mutual funds as a savings account, and move around here and there depending on what's up and what's down. I earn more over time than if I just held the cash in a savings account and I never take real risks with that cash as it's basically my retirement. It just floats around fortune 500 companies.
It won't make me rich, that's for sure. It's just a better way to compound money from a large sum than letting it sit and do nothing.
As for crypto, that's where I keep ~25% of my wealth so I have something to fucking do day by day. If I win a little, neat. If I don't,... eh, if I wait long enough, I will.

[Anonymous No.55395855]

>>55395593
>Don't most people who invest passively outperform the market as opposed to active investing?
Sure, if the market keeps pumping. Pretty easy to beat passive investing in a bear market though. Basically that argument is the same as saying:
>if price go up you shouldn't sell
Yeah, no shit but what if it doesn't go up anymore? In that situation a passive investor would just lose constantly.

Best part about an index fund is though that it never goes bankrupt where as individual companies do.

[Anonymous No.55395861]

>>55395629
You do your research or stay the fuck out of this market instead of paying for the lunch of a bunch of scammers in suits

[Anonymous No.55396172]

>>55395861
Why are index funds a scam?

[Anonymous No.55396216]

Passive is a sensible idea if you have alot of money but if you don't want to wait until retirement active invest trading can get much better returns. Depends if you want to put the time in to learn and research or not. Rebbit subs often think 5% + dividend is high risk and getting over 15% returns a year is pro level. Most people probably fail due to greed. I aim for a 1% a week and thats not as easy as it sounds but it is possible. As long as you don't blow up your account and don't go mad on high risk reward stuff been active is better if you can put some time in

[Anonymous No.55396262]

>>55395593
It's simple, actively managed funds are more expensive and perform worse than passive investing.

[/smg/mechanic !!NoOAsP/0dXQ No.55396342]

>>55395629
if people knew here then they wouldn't be in /biz/. i'd say research companies based on their potential growth or their valuation and go from there. if your emotional in your stock trading then i'd stick index funds just forget about it. no one likes seeing red in their portfolio especially a 10% loss or greater.

[Anonymous No.55396373]

>>55396216
Have you had success with this, have you outperformed the market?

[Anonymous No.55397378]

>>55395593
index is boring because you don't do anything. you miss out on the highest spikes, but you also miss out on the out of this world dips. long term investment is about minimizing risk and playing it steady, and it is as you say, no one truly beats index given enough time.

let it be boring, invest your money, and focus your extra energy on working to increase your cash flow instead. or better yet, do something else with your life. boring is good, it means you get to choose something better to do with your time.

[Anonymous No.55397399]

>>55396172
They only exist to fleece idiots for fees so a scammer in a suit can eat losing you money while you pay the scammer for the privilege of them losing you money

Genx had a reason to lobby to not be made responsible when their scams blow up, like they always do, they know that idiots buying index funds is in the end always going to be a crash, they are responsible for

[Anonymous No.55397427]

>>55395593
I would be a lot richer if I passively invested

currently keep an untouchable passive investment, and a smaller amount to gamble with, mostly options

[Anonymous No.55397873]

Unfortunately, passive investing into a well diversified index fund is the best way to achieve risk adjusted returns. It's boring af and takes all the fun out of investing but the returns simply can't be beat. It's nearly impossible to get rich quick by investing. To achieve the returns required to grow your probably modest capital into a stack of Scrooge Mcduck pile, would take immense risk and will probably only set your wealth back, further increasing the time it takes for you to get rich.
My advice would be to increase your earnings as much as you can, by any means necessary, in order to have more capital to pour into your portfolio and to move to a favorable jurisdiction, preferable one with a low cost of living

[Anonymous No.55399049]

>>55395593
Take the NNT-pill, but unironically. Let Tail-risk become your new God.

[Anonymous No.55399106]

>>55395593

[Anonymous No.55399117]

Index funds are for people with large salaries. You putting $100 dollars a week into it won't make you a millionaire before you're 75.

[Anonymous No.55399359]

>>55399117
>initial: 0
>regular deposit: 100/week
>Years: 35
>Interest rate: 9%
>result: 1.25 million
100 a week isn't much and sets you up for a cozy retirement.

[Anonymous No.55399461]

>>55395593
Build a portfolio with a big enough number where returns from indexes give a decent number; six figures is a good goal. After you have that invested take your income and try to get into active investing to make better returns

That's what I'm doing (65k net worth)

[Anonymous No.55399596]

>>55399461
makes no sense, yuo woul make more in passive etf (sp500 or msci world)


OP the answer is that yes the bogleheads are right. People on this board do not subscribe to that philosophy because they do not have enough income after cost of living to invest for decades.
They also don't think being rich at 60 is exciting and prefer a shot at being rich young than a certitude of being rich old.


Everybody knows in their heart what the correct thing to do is. Think about school, why did some study and why did others not? It's the same thing.

What requires effort and patience yields great benefit long term but is painful short/mid term.

Simple as.

[Anonymous No.55400180]

>>55399596
>long term
Retirement is so easy to fund. I'm 23 and am already assured I will have a cozy retirement just because of compounding interest.
I need more money now to fund a house and family, and slow and steady compounding growth over decades can't help me with that.

[Anonymous No.55400181]

>>55395593
The boglehead philosophy is about avoiding fees and taxes and not necessarily about getting the best returns. Index funds have low fees and if you wait years to cash out, you'll avoid short term capital gains tax. Sure, active investors may see better returns at first but what little they gain will be wiped out by fees/taxes.

[Anonymous No.55400333]

>>55395593
Per definitionem, passive index investing will net you the market average minus the fees (which are small). As others have said, this is good if you already have money because you'll usually beat inflation except in bad macro years, but you can balance this by de-risking into bonds, cash and treasuries. But you will never make big gains unless you move up the risk-reward curve to penny stocks, options, or cryptos. Practically, you should learn principles of risk management and portfolio optimization where you can calculate the proportions of your net worth that you allocate to cash/index funs/crypto/etc. in order to maximize your expected returns. This might work out to, say, allocating 10% of your NW to HRHR assets like crypto, allowing you to partake in some of the gains using a sum that wouldn't hurt too much to lose if the markets went to the downside. You can apply a lot of the same principles like DCA to crypto as you would index funds which helps average out the risk over time. For instance, 1 year ago I was down 50% on crypto, but I've DCA'd the whole time and today I'm only down 10% despite the market being rather flat and relatively still in the depths of the bear market. I project in another year I'll have broken even or in the money despite being just at the start of the bull market.

[Anonymous No.55401417]

>>55399106
ok now add a 4th one that's /biz/ and it's someone getting liveleak'd by a faulty escalator

[Anonymous No.55401469]

Gay and boring

[Anonymous No.55401595]

>>55395593
>>55399106
>>55401417
Not what you asked, I just threw it into Dall-e and had the AI generate a 4th panel

[Anonymous No.55401738]

>>55395593
The problem with index funds is that everyone does it, a large part of the value of these underlying stocks are derived directly from them being in the index, this in turn will drive up the ROI of the index fund, causing the effect we are seeing where index funds outperform stock pickers.

Look at what there actually is in SPY or VTI, the weighted index funds are heavily skewed toward the top companies, if you buy SPY most of what you buy is FAAMG. Everyone and I mean everyone, park their money into these ETF's, at the worst P/E ratio in the market.

If some of the big names in the underlying stocks begins to fail, there is a potential for a cascading effect where the index fund collapse and drive all the underlying stocks down to zero - even healthy company can die because of this cascading event.

[Anonymous No.55401972]

>>55399359
None would calc with 9% return though, average is more like 5-7%

[Anonymous No.55402048]

>>55401738
>If some of the big names in the underlying stocks begins to fail, there is a potential for a cascading effect where the index fund collapse and drive all the underlying stocks down to zero - even healthy company can die because of this cascading event.
What you are describing has already happened with the shit and piss 500 where most of the index is being held up by FAGMAN stocks while everything else in that group is in recession tier since mid-2021.

>>55395593
You can LITERALLY not beat the market and there is 100s of books explaining in-depth how ETFs out perform 99% of investors/hedge funds. If you are part of the 1% then you most likely have a PHD in math, have an IQ of 140+, and are not posting on 4chan.

[Anonymous No.55402063]

>>55401738
Why do you think a healthy company would die because their stock crashed?

[Anonymous No.55402185]

>>55399106

[Anonymous No.55402355]

>>55402185
excellent

[Anonymous No.55402680]

>>55402063
Healthy might be overselling it, but my logic being that if the value of the company drops significant, the debt to value ratio becomes heavily skewed, causing the credit rating to plummet and issuing new loans will be at sub-junk bond interest rates.
if such an environment persist for a prolonged time, the company will probably die out because most companies are dependent on issuing new loans and rolling over existing debt.

[Anonymous No.55402729]

>>55397399
>>55395861
do you guys realise that there are index funds that charge less than 0.05% per year?

[Anonymous No.55402855]

It’s really hard to beat the broad market. The funds that do beat the market run arbitrage strategies mainly. The problem with arbitrage strategies is that they are volume constrained. If you can create a better weighted large cap stock index than the SPY, you would make literally trillions and trillions of dollars in fees.

Some people believe passive investing to be a bubble though, and I tend to agree.

[Anonymous No.55403109]

>>55396216
You’re not averaging 1% a week, otherwise you’d be insanely wealthy.

[Anonymous No.55403123]

>>55395593
>Reddit tells me

[Anonymous No.55403175]

>>55397873
The point of investing isn’t to have fun it’s to make money
>>55399117
Agree but people with low salaries shouldn’t be dumping the little they have into the crypto slot machine they should be trying to better themselves to earn more
>>55395593
Barely anyone can beat the market consistently for decades so yes index funds are the best places to put your money long term. If you want to have fun then allocate 5-10% of your folio to individual stocks or crypto but 90% should be in index funds

[Anonymous No.55404454]

>>55403123
Do you trust 4chan or Reddit more?

[Anonymous No.55404525]

portnoobio strategies are for faggots that want to be rich when they are 60 and stressed out of their s&p performance when they are in their 30s. s&p can only go up that is per design.
has nothing to do with the companies that are currently in it. it was created more than 50 years ago when there were not even tech companies to trade. by design it can not have bearish trends and never had one.
enjoy your money when you are 80

[Anonymous No.55404567]

>>55403175
Large funds struggle to beat the market because they can’t make the investments as little guys. Little guys can beat the market.

[Anonymous No.55404835]

>dont most people who invest passively outperform the market?

No, they literally perform the exact same as the market.

[Anonymous No.55404911]

>>55404454
Reddit you all are a bunch of weird methheads. Reddit are upper middle class trannies but they tend to have their shit together.

[Anonymous No.55405029]

>>55404454
I'd say 4chan has been more beneficial to me over the years anon. I spotted Matic, Kas and Link here, and I also caught wind of Brillion which is on my radar for based rewards.

[Anonymous No.55405329]

>>55400333
Checked, how much do you dca per month?

[Anonymous No.55405401]

>>55404567
Ask yourself why those large funds can’t make the same investments as the little guys, it’s because statistically you’re way more likely to lose money in the long run and they actually have to answer to someone for their bad choices. A dumb retail investor who loses everything or underperforms doesn’t get in trouble. There’s also a huge selection bias where you hear more from people who succeeded than who failed among retail, but make no mistake, MOST retail investors lose out in the long run. If there was some consistent way for the little guy to beat the market then everyone would be rich. It’s all a fucking gamble, play this game long enough and the house will take all your money