passive investing

Active vs. Passive Investing

Active versus passive investing has been a decades-long debate among long-term savers. The active argument is that with time, energy and analysis, investors can beat an index or basket of fixed securities. The passive credo is simple: reams of data support the notion that purchasing a fixed basket, like an index fund, within most asset classes, will produce superior returns over long time horizons.

Legendary investors like Warren Buffett, John Bogle (the founder of Vanguard) and Charley Ellis, have extolled the virtues of passive investing, because even if low cost, tax efficient active management does exist – and indeed there are some stars out there – most investors either blow up their own plans or choose expensive active managers that routinely underperform.

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Although I have been an advocate of passive investing for a while, I also know that many people really want to try the active route. That’s why I invited two guests, both of whom are active acolytes from Investor’s Business Daily (IBD®) to help me try to guide those folks who are willing to take a stab at the active approach.

Chris Gessel directs the news, market, mutual fund, company and technology coverage that appears in IBD and Justin Nielsen is a member of the markets team at IBD. They say that if you have the itch, there are five critical questions that you must ask yourself:

1. Can you admit that you are wrong?
2. Do you like history?
3. Can you fight the urge to bargain shop?
4. Do you like to stick to rules or go with your gut?
5. Do you like to get your hands dirty or leave it to the experts?

Regardless of whether you have some experience or not, Chris and Justin recommend that you start with small amounts of money, in order to test out whether or not you have the discipline to do it.

If interested in joining Investor's Business Daily, you can click here for their current special offer.

Have a money question? Email us here or call 855-411-JILL.

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"Jill on Money" theme music is by Joel Goodman, www.joelgoodman.com.

The Power of Compound Interest + Active vs. Passive Investing

We started the show with Sam in Seattle, who only in his 30s, is worried he won't have enough saved when it's time to retire. Sam and his wife are in great shape...and let's just say that Sam is probably very grateful I gave him a quick lesson in the power of compound interest.

Next up was Peggy from Connecticut who was wondering if it makes sense to go ahead and pay off a home equity line of credit (HELOC) instead of paying the $200 a month in interest. 

We wrapped up hour one by answering a handful of emails. 

Active versus passive investing has been a decades-long debate among long-term savers. The active argument is that with time, energy and analysis, investors can beat an index or basket of fixed securities. The passive credo is simple: reams of data support the notion that purchasing a fixed basket, like an index fund, within most asset classes, will produce superior returns over long time horizons.

Legendary investors like Warren Buffett, John Bogle (the founder of Vanguard) and Charley Ellis, have extolled the virtues of passive investing, because even if low cost, tax efficient active management does exist – and indeed there are some stars out there – most investors either blow up their own plans or choose expensive active managers that routinely underperform.

IBD_stacked_294.jpg

Although I have been an advocate of passive investing for a while, I also know that many people really want to try the active route. That’s why I invited two guests, both of whom are active acolytes from Investor’s Business Daily (IBD®) to help me try to guide those folks who are willing to take a stab at the active approach.

Chris Gessel directs the news, market, mutual fund, company and technology coverage that appears in IBD and Justin Nielsen is a member of the markets team at IBD. They say that if you have the itch, there are five critical questions that you must ask yourself:

1. Can you admit that you are wrong?
2. Do you like history?
3. Can you fight the urge to bargain shop?
4. Do you like to stick to rules or go with your gut?
5. Do you like to get your hands dirty or leave it to the experts?

Regardless of whether you have some experience or not, Chris and Justin recommend that you start with small amounts of money, in order to test out whether or not you have the discipline to do it.

If interested in joining Investor's Business Daily, you can click here for their current special offer.

Have a money question? Email us here or call 855-411-JILL.

Connect with me at these places for all my content:

https://twitter.com/jillonmoney

https://www.facebook.com/JillonMoney

https://www.instagram.com/jillonmoney/

https://www.linkedin.com/in/jillonmoney/ 

http://www.stitcher.com/podcast/jill-... 

https://apple.co/2pmVi50

"Jill on Money" theme music is by Joel Goodman, www.joelgoodman.com.

Buffett Advocates Passive Investing

Buffett Advocates Passive Investing

“Both large and small investors should stick with low-cost index funds,” according to Berkshire Hathaway Chairman Warren Buffett. In his annual shareholder letter, the Oracle of Omaha reminded investors something they probably know intuitively, “When trillions of dollars are managed by Wall Streeters charging high fees, it will usually be the managers who reap outsized profits, not the clients.” This is not a new message for Buffett. Three years ago, he provided similar advice to the trustees of his estate: “Put 10 percent of the cash in short-term government bonds and 90 percent in a very low-cost S&P 500 index fund…I believe the trust's long-term results from this policy will be superior to those attained by most investors…who employ high-fee managers.”

#279 Making Money in a Low Return World

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Making money in a low return world is tough. Last week, the yield on 10-year US government bonds touched an all-time low and stocks have been stuck in neutral for two years. Given the current environment, return caller Ryan asked whether one asset allocation fits all portfolios? In other words, should you put those investments which are likely to appreciate the most in a Roth IRA, where you will never have to pay taxes on the gains? It may take some some work, but the idea has merit.

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Heather Long, CNNMoney's senior markets and economy writer, joins the show to weigh in how you can make money in the current low return era. Heather notes that most forecasters now expect below average returns for the major asset classes over the next five years. She helps us decide what to do about it. Heather also discussed politics, diving into the question: Who’s better for your money: Trump or Clinton?

Thanks to everyone who participated this week, especially Mark, the Best Producer/Music Curator in the World. Here's how to contact us:

  • Call 855-411-JILL and we'll schedule time to get you on the show LIVE