Why Experts Say Stop Picking Stocks and Just Buy Everything
Bottom line
Index funds have outperformed most professional stock pickers over any 15 year period.
In this guide
What it is
An index fund is a single investment that automatically buys a tiny slice of hundreds or thousands of companies at once, so when the overall market goes up, your money goes up with it.
By the numbers
If you put $300 a month into an index fund starting at age 25 and it grows at the stock market's historical average of 7% per year after inflation, you'd have roughly $760,000 by age 65. without ever picking a single stock.
How it works
The fund tracks a market index (a pre set list of companies used to measure how the stock market is doing overall). When you buy in, your money gets spread across every company on that list automatically, and the fund rebalances itself so you never have to manage it.
The catch
Most people assume a professional fund manager. someone paid full time to pick winning stocks. would beat a hands off index fund. Over any 15 year stretch, more than 90% of actively managed funds (ones where humans pick the stocks) underperform plain index funds, largely because their fees eat the returns. A 1% annual fee sounds small but costs you roughly $170,000 over 40 years on that same $300 a month investment.
What to check next
Log into your workplace retirement account and look at your current fund choices. find any fund with 'index' in the name and compare its expense ratio (annual fee) to what you're currently in.
Your next step
Now put it into practice with your own numbers.
Go deeper with your own numbers — tools, plain-English explanations, and a clear starting point for your specific situation.
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