Index Investing vs. Active Management: Are You Making a Mistake?

Money Guy Show

Brian Preston, CPA, CFP®, PFS and Bo Hanson, CFA, CFP® | Fee-Only Fiduciary Advisors

Education, Retirement, Moneyadvice, Investing, Savingmoney, Personalfinance, Business

4.6 • 2.8K Ratings

🗓️ 18 January 2019

⏱️ 41 minutes

🔗️ Recording | iTunes | RSS

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Summary

Assets in passive equity strategies grew to nearly 45 percent of all stock market investments in the U.S., and active equity managers continue to lose ground due to the over $470 billion investors have invested in passive equity strategies like index funds.

There is good reason why index investing has an eager and growing participation. It is much cheaper than active management. But, are index funds better for your financial goals? The answer is yes, but with a footnote.

For anyone that has listened to our show for some time, you know that we are huge proponents of index investing. There are a lot of reasons to like index funds, but what is the difference between index investing and active management? And how can you use index funds to reach your financial aspirations? That’s what we cover in today’s episode of The Money Guy Show.

For more details, please visit the show notes on our website:

https://www.moneyguy.com/2019/01/index-funds-vs-actively-managed-funds-are-you-making-a-mistake/

Transcript

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0:00.0	Index investing. Secret to financial success?
0:04.0	Should we still be using the active guys?
0:07.0	It's Brian Preston, the money guy, restoring order to your financial chaos,
0:13.0	retirement, investing, taxing.
0:16.0	You've got financial questions, he's got financial answers.
0:19.0	It's Brian Preston, the money guy.
0:23.0	Index investing versus active management.
0:25.0	This seems like it's one of those battles that you can go find
0:29.0	a gazillion articles on it.
0:31.0	Every time I read an article on index investing where they try to compare and contrast
0:36.0	to active management, it's always lacking in detail.
0:41.0	I've tried to create an analysis that gives detail, but here's the other thing.
0:46.0	I'm actually not going to completely throw the active managers under the bus.
0:50.0	I think that there is still a time and a place for a section of your investments
0:56.0	with active management, but I will tell you, I do feel like the battle has been decided
1:01.0	in several asset classes.
1:03.0	Do you agree or disagree with me?
1:05.0	No, I do agree.
1:06.0	I think what's interesting is this battle, I mean, it was Bogle who came up with the first idea of this index fund.
1:11.0	They've been around for a long time, and it seems like since the inception,
1:15.0	the fight for them has gotten stronger and stronger and stronger.
1:19.0	It almost sounds like you're willing to lay the claim now.
	...

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