Low Costs are Key to Good Long-term Investment

Warren Buffett has proved that simple and low-cost investment is a better investment strategy than hiring expensive fund managers. His best strategy is building a durable portfolio by analyzing the performance of companies. He prefers putting money in S&P 500 index fund. He advised shareholders to be wary of mutual funds because most of them offer poor long-term returns. Some analysts agree with this approach of investment. They also see passive index funds as a risky investment. This kind of investment has higher hidden opportunity costs. It is exposed to volatility in the market and more information click here.

History has proven that investors who perform better in the bear market grow their portfolio faster than those who perform better in the bull market. The notion that passive index is a better investment option for retirement is subject to challenge. Index funds have no cushion against market downturns. Tim Armour is the CEO and Chairman of Capital Group. He said that there is no clear signal that funds are performing best. It is important to note that the best way for investors to identify the best fund managers is by looking at expenses and manager ownership. Higher manager ownership and lower management cost result to a better fund and what Tim knows.

Global markets are experiencing higher interest rates, higher growth rates, and higher inflation right now. Tim recently gave his honest projection of post-Trump market changes. He warned that there would be turbulence that will be primarily driven by the uncertainty of the policies of the new administration and the rise of populism in various parts of the world in the coming days. He observed that globalization has brought new challenges to America and other countries across the world. Tim Amour has worked with Capital Group for more than 30 years. He was elected as the chairman of the group by the board of directors in 2015. Tim is in charge of the management of the firm’s finances as the chairman and CEO. Tim is leading the implementations of the company’s strategies together with senior members of the management committee.

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