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The main problem I have with index funds is the otherwise financially savyy people who tell me that index funds will get you on average x% a year. No! Index fun
by aakilfernandes 10y ago
The main problem I have with index funds is the otherwise financially savyy people who tell me that index funds will get you on average x% a year. No! Index funds, in the past, gave x% a year. However past performance is not a predictor of future performance.
There is no law of physics/economics that says the S&P500 has to rise at x% a year on average.
- lintiness 10y agoon top of that, the entire argument is predicated on us stock returns over a 100-150 year time period (an unusual one at that). what's the real expected investment life of the audience? the sample is ridiculously small.
- tanderson92 10y agoIt sounds like your problem may be forming your opinion of index funds based on the comments of people who are not financially savvy. Extrapolating an opinion about people who you admit are not financially savvy to the question of whether the financial products themselves are a good investment doesn't make too much sense to me.
- mac01021 10y agoPast performance should be a predictor of future performance if the forces driving the market remain similar to the forces driving it in the past. If they are not the same, then past performance may be a very bad predictor. But even in that case it is hard to imagine I'd do better by picking individual stocks unless I start researching companies as a full-time job.