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hi amber - from freaking Carol today
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let's talk about the only reason why you
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should invest in index funds and why I
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don't that's basically because I'm lazy
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but before I begin I want to tell you
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that I will be speaking online tomorrow
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about the dead front crisis and
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investing beyond the lockdown that is
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the market outlook post log down for the
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tamil nadu investors association so that
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the entry is free it will be via a
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Microsoft team link I have shared the
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link in Facebook group as on ideas for
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wealth I will try and share the link
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here but I don't know Google I mean
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YouTube may call it a spam otherwise you
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can go to Facebook group asana is a
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wealth and you can have a look at it
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otherwise what you can do is I will also
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share it in the Facebook page of free
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Finkel calm and Twitter page your free
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fan cap you can head over there and see
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it link so that would be easy so I've
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seen since the test be a reasonable
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increase in popularity it's not such a
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great increase that you should say that
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is the age of index funds and all that
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it's a noticeable small increase and
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popularity of index funds but
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unfortunately much of it has been star
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rating driven for example people's even
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started investing in the nicotine next
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50 because of its five star rating it is
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no longer a five-star rated fund and
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they assume that it is a large gap
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that's another mistake and then people
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started assuming that large caps because
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of the severe emulation and so on large
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caps were actively managed large caps
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funds would not be able to beat the
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index funds and therefore they tasted
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the index funds are good and then when
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they wanted to start investing in index
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funds they started looking for funding
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tracking error lowest expense ratio this
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that is that and so on as usual the best
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fund the business the best fund mania
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has shifted from the active ones to the
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passive funds I think all that is wrong
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can you don't do that there is only one
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reason why you should be investing in
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passive funds and that is what is called
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as fund manager risk or active
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management risk you must have seen if
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you have been investing in active
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managed actively managed funds for a few
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years you must have seen that you choose
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a fund based on its star rating or based
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on its past performance then a couple of
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months later or maybe a few maybe in a
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year or so later it performance drops
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down the star rating goes down then you
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decide okay let me add one more star
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rating fund then you buy that then after
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a few months the same thing happens to
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that and so on and so on and so on soon
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when you look at your portfolio what was
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one fund is no difference so this is the
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big problem with actively managed funds
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especially when you do peer comparison
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I'm not even talking about beating the
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benchmark even if they beat the
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benchmark because they are not the best
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you feel compelled to try and buy
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something else and so on so you to save
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your portfolio from clutter to save
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yourself from the headache of choosing
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the best actively managed funds which
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keeps changing every day to save
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yourself all that you just say I don't
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want this mess it's gonna cost me a lot
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of headache it's gonna cost me a lot of
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tax if I keep switching and it's gonna
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cause a lot of so much clutter in my
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portfolio that I will be buying more and
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more of the same stock and essentially I
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will be buying the whole market if I
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have 2030 funds and and I will be buying
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the market I will Myron my portfolio
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return will be essentially the market
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return and I will be paying expensive
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fund management costs instead of all
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that I can choose an index fund with
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much lower cost compared to an active
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fund and simply choose one two or three
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fund two or three index funds or one
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index fund depending on the size of your
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portfolio if you have a portfolio of
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five crores it's not correct to invest
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in just one index
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a equity portfolio 5 crores you can't
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put all of it in they say one index fund
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from one AMC that I think it's just too
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much of concentration risk with one we
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have to spread it between two three aims
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is that but then you get to that level
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you can worry about it don't do it now I
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have seen people say I want to invest
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five thousand rupees in five funds don't
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do things like that
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I mean thousand rupees each and five
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point is that that kind of thing is see
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that's ten so that is the only reason
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why you should choose index funds don't
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choose for any other reason don't start
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hunting for lowest expense ratio lowest
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tracking around all these are variable
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they just keep changing every day every
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few weeks you just can't hope to be
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invested in the best fund that's just
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not possible I think it's important to
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tell ourselves that we can't be
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searching for the best fun so that's the
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only reason you should be invested in
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index funds and the reason why I have
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not even with just reaching to index
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once is just sheer laziness I just lazy
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I have a big corpus and in the three
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plus three funds three funds for
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retirement three funds for my child's
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education I just don't want to do
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anything with that I am I'm just too
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lazy and I'll be paying a lot of facts
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just for the sake of switching to
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passive funds I don't care the point is
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I don't care
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everything the problem starts with when
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you start worrying
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oh should I switch to passive funds who
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invested in the best fund am i choosing
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the best passive fund if you start
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worrying about all this you will get
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into a lot of confusion I save myself
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all this confusion I just don't care I
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said and I don't ask other people what
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we have to do that's where the confusion
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becomes even worse if you ask investment
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advice in a song ideas are wealth it's
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the worst thing that you can do to your
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portfolio so every Tom Dick and Harry
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will say whatever they want including me
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so I don't do that I don't ask other
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people investment advice whatever
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happens happen so that's I just sheer
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laziness and inertia for want of a
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better word that I am NOT doing it but
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if you want to do it the only reason you
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should be doing it is to get rid of
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fund manager risk so that's what I
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wanted to say if you're interested in my
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talk tomorrow 10:30 I will leave the
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link in the free Finkel YouTube channel
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I'll sorry not not sleep in Cal space
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book page not little j-3 Finkel Facebook
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page freaking Cal Twitter page and you
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can follow it somewhere
