October 9, 2013
Warren Buffett recommends the average investor select broadly diversified no-load index mutual funds. Why?
Warren Buffett recommends the average investor select broadly diversified no-load index mutual funds. Why?
They are associated with very low fees and NO commission! Yay! So basically you would expect to receive more bang for your buck rather than having everything swallowed up by those fees and commission.
This is because individual investments are risky. The businesses that you individually invest in could tank(as some in the past have before: Enron) and could lose much of your portfolio. If you select broadly diversified no-load index mutual funds you mitigate your risk within the market. The general historical trend of these funds is up as time marches on, so they are a good, safer investment of your money that historically you are going to get your returns on.
Glad to see you in the discussion, Alayna! You are correct. Mr. Buffett says this:
Most investors, both institutional and individual, will find the best way to own common stocks is through an index fund that charges minimal fees. Those following this path are sure to beat the net results (after fees and expenses) delivered by the great majority of investment professionals. – Warren Buffett
Would you rather hear him say it? Go here:
http://www.youtube.com/watch?v=idr6c8NHuWs
So here is the question. Who are you going to listen to? Warren Buffett or the financial salespeople who sell products that earn them big fat commissions. I will stick with Warren Buffett. I recommend you do the same.
Well said, Alex. You and I were responding at the same time. Once again, you are demonstrating the financial wisdom of someone much older and more experienced. Well done!