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February 24, 2009


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I love index funds, because they do better than most investments in securities due to the lower fees and lower turnover.

That said, I'm a little surprised there are still quotes like this out there that seem to downplay the risk:

"Index funds are part of a balanced stress-free portfolio. You can use them to buy an overall “market” position. But you should also be considering other options with a portion of your portfolio in more risky investments (only to the degree that you can afford to lose that money)..."

I think we've learned there is nothing stress-free about a S&P500 fund nor is that the place where you can put money you can't "afford to lose". Folks who thought an index fund was the key to safety learned dearly with the Nasdaq100 in 2001, and seems like a lesson being retaught with the S&P500 and "total market" indexes now.

Great tip, and presented in a way that even I could grasp it right away. :-) Thanks!

Thanks, Great tips. I didn't know what an index fund was ;)

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