This is a continuation of my 10 part series on the core concepts I am focusing on in this difficult market environment. (Part I, II, III, IV, V, VI)
Number 7:
If as an investor you can’t beat the index then just give up!
I don’t mean investing altogether, but if you find that your actively managed fund, stock portfolio or alternative investments are doing poorer than the overall index – simply buy the index.
Indexing is cheap, effective and you can do it without even looking at the markets on a day-to-day basis. Invest your money into the couch potato portfolio, set up an automatic monthly purchase schedule and DCA (dollar cost average) into your four core holdings over the next few years.
As a long-term investor you’d be hard pressed to find a better alternative if investing in individual stocks isn’t your forte. If you have a long-term investing horizon and don’t have the stomach for stock selection than you can simply set it, forget it and rebalance on an annual or bi-annual basis to reset your set allocation of funds.
Bottom Line: Protect yourself. If you don’t have the tools or knowledge to do the required due diligence and invest directly into equities invest into a set of indices that over the long-term will recover, compound and grow.
Suggested Funds I Own: TD CDN Bond Index-e (TDB909), TD CDN Index-e (TDB900), TD US Index-e (TDB902) & TD International Index-e (TDB911)
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