Here's a piece from Yahoo that says exchange traded funds (ETFs) and index funds are great investments. It highlights the results of an investment advisor who's doing pretty well using them as his sole source of investing. Here are some of the key ideas from the article:
His portfolio consists of passively managed index mutual funds and ETFs. "I'm not a trader," said Roth. "I invest in the total stock market, occasionally slightly overweighting different styles or cap sizes."
He favors ETFs with broad-based benchmarks. "They're lower cost, more transparent and more diversified," said Roth. "They're also far more tax-efficient."
As I've stated, I'm learning the basics of ETFs. I hope to develop some smart investment strategies around them soon. But I do know and like index funds.
It seems the reasons ETFs (at least the index-based variety) and index funds do so well is because they keep costs of all sorts low -- a key to great investment results. After all, which would you rather have, an investment that earns 12% but loses 4% in fees, taxes, and other costs or one that earns 10% and only gives back 1% in costs?
By the way, the New York Times magazine this week is all about debt:
http://www.nytimes.com/pages/magazine/?8qa
Posted by: beloml | June 12, 2006 at 09:35 AM