itnetpro wrote: Sat Feb 01, 2025 12:58 pm
Some folks are very rigid in their perspective and have difficulty understanding that one size does not always fit everyone and there are many ways to achieve our goals that work just fine.
...
Yes, it’s true,
I was a bit lucky owning it ...
It's not about being "rigid" - it's about trying to help people avoiding attempts to "
be lucky." That's what most of us eventually figured out - often the hard and painfull way. We learned that it's a fools errand trying to "pick" stocks (or by extension "pick" stock funds, or "pick" fund managers). We learned that it's impossible to "time the market", including trying to figure out when to get in or out, or when to switch investments between funds. Again, the data is there for anyone to review; this isn't "faith", it's well proven and consistent result over many, many years now.
You got "lucky" - and congrats to you!
Maybe jen25w will get "lucky" with picking an active fund as well.
But our investment advice isn't based on "luck." It's the "tried and true", "slow and steady", "boringly simple" way to achieve success.
To repeat a quote, I think I listed earlier, Bogle once said something like "the Three Fund Portfolio
may not be the best portfolio, but it's
better than an infinite number of worse alternatives." "Picking" stocks/funds is most likely going to put someone into that "infinite number of worse alternatives."
Obviously, people are free to make their own choices. People are free to ignore the advice offered. People are free to attempt to "be lucky", maybe they'll even "beat" the index and repeat the luck you claim.
In jen25w's case, again they have an exceptional savings rate, and already invested primarily in an index, they are off to a great start! I personally don't think they'll gain
what they think they'll gain by
adding an active fund (which just duplicates things they already own, thus reducing diversification and raising risk) - but they are obviously free to do whatever they wish to do.
itnetpro wrote: Sat Feb 01, 2025 12:58 pm
My perspective is, as long as you understand the risk, (And to a lesser extent the cost) I mean REALLY understand through testing your choices using back test and researching the actives you are considering. You are golden!
Wise advice - but I'm not sure how that advice comes across when you are basically giving a "thumbs up"
without them having actually done the work to "REALLY understand" the risk...
itnetpro wrote: Sat Feb 01, 2025 2:58 pm
It’s up to her to decide how little or much she wants to learn about investing. I did not discourage her because of the question or choice of funds to invest in. She did pick two out of the thousands. Both are pretty much stand outs in the actively traded world. She must have done some research.
I'm not sure how this squares with your prior comment. You are
making an assumption on the research they did, because they happened to name a few funds you are familiar with - and presumably personally like. Do
they "REALLY understand" the risks? Or are they just getting the "hype" from others and following along?
itnetpro wrote: Sat Feb 01, 2025 12:58 pm
Hence the part, index’s are NOT for everyone…
We are going to disagree here... Indexes are perfect for everyone.
But sure, indexes aren't "required" for everyone. The vast majority of my extended family and friends remains financially ignorant, still "trusts their finance guy", randomly picks funds in their 401k.
If they save enough, they'll be just fine, despite making "less than ideal" investment choices... But 99.9% of them would have been better off using boring old index funds...
And again, indexes aren't "required" for everyone - definitely not the "Three Fund" variants. Some people are probably best served by a simple "one-fund" portfolio, such as a target date fund. Some prefer the simplicity of a dividend-based fund like Wellesley.
Hopefully, they understand dividends are irrelevant. https://www.youtube.com/watch?v=f5j9v9dfinQ Hopefully, your mother is living a comfortable life and not
artificially constrained by living off of "only the dividends."
But if your point is you aren't going to go and "convert" people to indexes - I'm OK with that. Again, the vast majority of my extended family and friends
should be using indexes.
If they ever ask me for financial advice I'll happily explain that I use indexes and if they want to know why I'll offer to explain it. But I'm not putting my nose in their business... People don't respond well to being "told" what to do...
itnetpro wrote: Sat Feb 01, 2025 2:58 pm
You can give me your best 3 index fund portfolio that you could possibly come up with. I can backtest and find an old active that not only crushes it but more than makes up the fee over a lifetime.
Sorry, but this just sounds silly to me... Life is not lived in reverse... We can't simply "mine the data" and "pick" the thing that
once worked...
Or to make a more direct point, if it's so easy, and if the data is there to support finding something better than an index, then why are active fund managers consistently failing to provide better results? These are highly skilled people, with vastly more resources than we have, yet year-after-year, they can't consistently beat the index... Again, this is backed by data:
Again, maybe you and/or jen25w will be "lucky" and find that 6% who beat it over 20 years... I'd rather not rely on luck...
This is what the people suggesting the benefits of using boring old index funds understand. The data shows they are almost always better, and the
odds of you picking the few that
might be better are not in your favor... Why take the added risk, when "slow and steady" gets things done...
itnetpro wrote: Sat Feb 01, 2025 2:58 pm
It’s up to her to decide how little or much she wants to learn about investing. I did not discourage her because of the question or choice of funds to invest in. She did pick two out of the thousands. Both are pretty much stand outs in the actively traded world. She must have done some research.
Let’s educate, give the tools...
What do you think it is we are trying to do?
We aren't simply patting jen25w on the back and saying "hey,
I like that fund, you'll be fine"... One could argue
that is condescending...
We are attempting to educate, to share what we've learned - often the hard way, and help them
make up their own mind...
“There are three kinds of men. The ones that learn by readin’. The few who learn by observation.
The rest of them have to pee on the electric fence for themselves.” Will Rogers
Again, they are free to ignore our advice. Some of us just have to pee on the electric fence ourselves...
itnetpro wrote: Sat Feb 01, 2025 2:58 pm
stop criticizing someone like here with condescending tones. We were all in her shoes once…
She came here to learn not be ridiculed…
Here, I'm in violent agreement!
There’s no way I’ll have that much money.