When I began racing sailboats, I learned to listen to experts if I wanted to become a winner. It is the same with investing. This is what experts say about Total Market Index Funds:
Sixteen reasons to select Total Market Index Funds:American Association of Individual Investors: "It should come as no surprise that behavioral finance research makes a strong case for buying and holding low-cost, broadly diversified index funds."
Bill Bernstein: "If you own VTSMX with a bit of foreign and REIT, mixed with your bonds, you're most of the way there."
Jack Bogle: "The beauty of owning the market is that you eliminate individual stock risk, you eliminate market sector risk, and you eliminate manager risk."
Scott Burns, columnist, author: "The odd are really, really poor than any of us will do better than a low-cost broad index fund."
Andrew Clarke, author: "If your stock portfoliio looks very different from the broad stock market, you're assuming additional risk that may, or may not, pay off."
John Cochrane, President American Finance Association: "The market in aggregate always gets the allocation of capital right."
Jonathan Clements of the Wall Street Journal: "If you want a surefire strategy for outpacing most other U.S. stock investors, simply shovel money into an index fund that tracks a broad U.S. market index such as the Wilshire 5000 or the Russell 3000."
Prof. Eugene Fama: "When I talk with pension fund people, what I start with is the market portfolio. That's always one of the optimal portfolio' one can settle on."
Paul Farrell, CBS: Where does Fama invest his retirement money?" In index funds. Mostly the Wilshire 5000."
Rick Ferri, author: "For 99% of the the investing population, I still recommend total stock and total bond market index funds."
Graham/Zweig, authors: "The single best choice for a lifelong holding is a total stock-market index fund."
Alan Greenspan: "Prices in the marketplace are by definition the right price."
Sheldon Jacobs who wrote the first book on no-load fund investing: "The best index fund for almost everyone is the Total Stock Market Index Fund.--The fund can only go wrong if the market goes down and never comes back again, which is not going to happen."
Lawrence Kudlow, CNBC: "I like the concept of the Wilshire 5000, which essentially gives you a piece of the rock of all actively traded companies."
Prof. Burton Malkiel: "I now believe the best general U.S. index to emulate is the broader Wilshire 5,000 Stock Index--not the S&P 500."
Bill Miller, famed fund manager: "With the market beating 91% of surviving managers since the beginning of 1982, it looks pretty efficient to me."
Motley Fools: "Invest your long-term moolah in index mutual funds that are designed to track the performance of a broad market index."
Pat Regnier, former Morningstar analyst: "We should just forget about choosing fund managers and settle for index funds to mimic the market."
Ron Ross, author: "Giving up the futile pursuit of beating the market is the surest way to increase your investment efficiency and enhance your financial peace of mind."
Paul Sameulson, Nobel Laureate: "The most efficient way to diversify a stock portfolio is with a low-fee index fund. Statistically, a broadly based stock index fund will outperform most actively managed equity portfolios."
Gus Sauter, "I think a very good way to gain exposure to the stock market is through the Total Stock Market Portfolio on the domestic side."
Bill Schultheis, author: The simplest approach to diversifying your stock market investments is to invest in one index fund that represents the entire stock market."
Charles Schwab: "Only about one out of every four equity funds outperforms the stock market. That's why I'm a firm believer in the power of indexing."
Chandan Sengupta, author: "Use a low-cost, broad-based index fund to passively invest in a little bit of a large number of stocks.
Prof. Jeremy Siegel: "For most of us, trying to beat the market leads to disastrous results."
Ben Stein: "Scholarly work by Burton Malkiel, Eugene Fama and others has proved that it is the rare investor indeed who can outperform the overall market."
"Robert Stovall, investment manager: It's just not true that you can't beat the market. Every year about one-third do it. Of course, each year it is a different group."
Larry Swedroe, author: "Over the last 75-years, investors who simply invested passively in the total U.S. stock Market would have doubled their investment approximately every seven years."
Peter D. Teresa, M* Sr. Analyst: My recommendation: a fund that indexes the entire market, such as Vanguard Total Stock Market Index."
Jason Zweig of Money magazine: "I think a total stock market index fund is not only the simplest, but the very best core investment for most people.
Warren Buffett, famed investor: "There seems to be some perverse human characteristic that likes to make easy things difficult."
1. Low expense ratio.
2. Low Turnover (under 4%)
3. More diversification than any other US stock fund.
4. No stock overlap.
5. No manager changes.
6. No style drift.
7. Additions & withdrawals do not unbalance portfolio.
8. No worry--the stock market has always gone up.
9. Never below market's average performance.
10. Contains every style and cap-size.
11. Never needs rebalancing.
12. Past returns are much above average.
13. Extremely tax-efficient.
14. Turns tax-Inefficient stocks into tax-Efficient stocks leaving more room in tax-advantaged accounts.
15. Total market funds avoid "front running."
16. Simplicity--more free time.
TOP 27%--Total Stock Market (15-years)*
TOP 18%--Total Stock Market after tax (10-years)*
TOP 21%--Total International (10-years)*
TOP 16%--Total International after tax (10-years)*
TOP 28%--Total Bond Market (15-years)*
*Longest period readily available at Morningstar
Investing in Total Markets