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This Is Your Single Biggest Investment Mistake

Research shows these funds are not producing enough returns to cover trading and operating expenses.

I’m not going to make you wait for the punch line. Your single biggest investment mistake is owning any actively managed funds. That’s where the fund manager, through stock picking and market timing, attempts to beat the returns of a designated benchmark, like the Standard & Poor’s 500 index.

I started writing books and blogs about investing in 2006. At that time, only a very small minority of people invested in index funds. Jim Cramer was at the height of his popularity.

I struggled with different ways to communicate to investors that the only intelligent and responsible way to invest was to capture the returns of the global market. This meant investors should avoid stock picking, reject market timing and not engage in the fruitless attempt to pick the next “hot” mutual fund manager. The general reception to this message was about the same as you would expect watching a vegetarian lecture to a cattlemen’s convention. The common objections were:

Read the rest of the article at US News.

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