Ignore pundits and thrive with simple passive investing

A 2018 study by S&P Dow Jones Indices showed that most actively managed funds fail to beat their benchmarks over a decade. The gap widens further once you factor in expense ratios averaging 0.7–1.5%—money that could have stayed in your pocket.

Passive investing, by contrast, relies on the principle that markets are more efficient than any single human. Nobel laureates in economics demonstrated decades ago that broad diversified index funds capture the market’s average return with minimal friction. And numerous follow-up studies confirm that low fees are one of the strongest predictors of long-term returns.

Imagine investing in an S&P 500 fund charging just 0.05% versus a popular actively managed fund charging 1.2%. Over twenty years, that fee difference alone can cost you tens of thousands. Yet experts still sell the allure of “beating the market,” when the data says the odds are under 25%.

Shifting to index funds isn’t about pessimism—it’s about aligning with the evidence. By embracing simplicity over speculation, you benefit from the market’s broad growth without extra cost or worry.

Don’t chase hot tips or outguess pundits—compare your current fees to a low-cost index, open a passive fund account, and set up regular monthly buys. Then let the market work for you.