I have been using index funds and other passive investments for my clients for more than a decade… And, for good reason. Most importantly, passive investments (like index funds) tend to outperform the Wall Street stock-pickers over long periods of time because their fees are so much lower. This fact hasn’t been lost on investors, who continue to pour money into Vanguard funds, which now has almost $3 trillion in assets under management.
According to Morningstar, investors moved $336 billion into passively-managed stock and bond funds in 2013, compared to just $53 billion into actively-managed funds. Even Warren Buffet gave a nod to index investing in his latest annual letter to shareholders. Mr. Buffett, 83 years old and with a net worth of $66 billion, wrote that he advised his trustee to “put 10% of the cash in short-term government bonds and 90% in a very low-cost S&P 500 index fund. (I suggest Vanguard’s.).” Clearly, the clients of SilverPeak Wealth are in good company.