Forget Market Timing. Slow and Steady Wins the Race with Low Cost ETFs

Today, NPR's Uri Berliner looks at the impulse to beat the market. As part of his exploration of stock investing, he talks to me at about low cost ETFs.

Today's Morning Edition from NPR addressed the desire many of us have to beat the market. Anyone who knows me, however, is well-aware that I am a Very Boring Investor.

I'm not interested in beating the market. And you shouldn't be interested in beating the market, either. Rather than try to beat the market, it makes more sense to look into index funds and ETFs with low fees.

You won't see the sexiest gains, but low cost ETFs can be a way to diversify your portfolio as well as see consistent growth over the course of decades. When it comes to long term investing, it's all about the low cost ETFs and index funds.

Have a listen to this segment from NPR this morning. It's interesting and informative. And at about 5:47, there's a small appearance from yours truly.

10 thoughts on “Forget Market Timing. Slow and Steady Wins the Race with Low Cost ETFs”

  1. Absolutely! I was recently reviewing my 401K choices and noticed almost all of them had a 5.xx load and a 1.x er! Dumped most of them (even though ytd results were good – well the overall market is doing well, so no surprises here!) and bought into the only S&P 500 index fund in the list!

    You simply cannot win with such high costs. I’m glad NPR is highlighting this truth. In other news, even Bernie Madoff thinks index funds are the way to go!

    1. Miranda Marquit

      I was shocked, too, when I saw how much I was paying in expense ratios prior to switching out of an actively managed fund. There is some research from think tank Demos that suggests that you could end up losing out on $155,000 over a lifetime because of fees, once you factor in the actual fees paid and then what you lose sine that money is no longer in your account, earning returns.

  2. Michael @ The Student Loan Sherpa

    Index funds are definitely the way to go. I don’t view investments as a lottery ticket, its just a prudent place to put my money. Index funds are the most in line with that philosophy.

    1. Miranda Marquit

      Yeah, over time, index funds are the investments most likely to help you build wealth. But you have to take a realistic approach. As you said, viewing investments as lottery tickets — a sudden and huge windfall — is only going to lead to disappointment.

  3. Mike@WeOnlyDoThisOnce

    Market timing seems best left to those who do it for a living. Short term fluctuations almost always balance out when we don’t panic.

  4. Golden! Never saw the point to time the market, since most of those who do it for a living – fail. Buying index funds or solid companies with great prospects for the future is definitely that way to do.

  5. STEVEN J. FROMM, ATTORNEY, LL.M. (TAXATION)

    This is the only way to invest. Build a portfolio of ETFs, index funds, no load funds that invest in large, medium and small cap funds with value, growth and blend categories. Pick percentages in these categories that agree with your risk tolerance and go from there. Forget beating the market; it cannot be done.

  6. Hi Miranda,

    I found your website via Money Tree podcasts and I am curious how to evaluate index funds? Are there certain criteria you look for? Are there any good resources/blogs/books that provide you good criteria to look for? Do you have a blog post about that?

    Thanks,
    Ravi H

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