Tuesday, July 01, 2008

Buffett's Betting on Index Funds

Warren Buffett has engaged in a wager with three hedge fund managers. Buffett's claim is that an S&P 500 index fun will beat out the average of five hedge funds, net of all expenses, over the next 10 years.

A few years ago, a finance professor of mine spent a full lecture ranting and raving about how managed funds are taking away returns from investors. His opinion was that no one can beat the market. Everyone should invest in index funds and leave their money alone. Buffett is of that opinion as well.

Both my 401K and ROTH are in managed funds. However, I'm meeting with my adviser later this month to, among other things, change my IRA so that any new money purchases index funds. My 401K choices are a bit limited so I plan on keeping things as is for now.

How do you feel about managed funds verses index funds? Are you getting your money's worth with a managed fund?

4 comments:

David said...

I agree with Buffett :)

My question is, if you are buying index funds, why would you need an adviser?

Mac Noland said...

That's a good question. I'm in the market for life insurance and a living will. From what he tells me, an adviser can help with that.

I actually have a mind to drop the guy, but given he's a friend of Jenny's former roommate, I've not decided what to do.

Mac Noland said...

That's a good question. I'm in the market for life insurance and a living will. From what he tells me, an adviser can help with that.

I actually have a mind to drop the guy, but given he's a friend of Jenny's former roommate, I've not decided what to do.

Scooter said...

Might want to wait a while - the Dow may still be headed down.

Do you think the closing of the 600 Starbucks is related to us having less disposable income to spend on coffee as gas prices go up? And if so, do you think Dubai might feel a bit silly for investing in coffee shops (Caribou) when they're at the mercy of gas prices? I wonder if oil profits will offset coffee losses?