Why I Don’t Buy Index Funds

Take $500 a month, put it into a broad based index fund, and you’ll retire a multimillionaire. This is the most common investment advice you’ll hear, and most people treat it as gospel. Which is why today’s article provides an opposing view. Below are my three reasons for never buying index funds.

Passive Portfolio, Passive Mindset

Index fund investing is built around the hook that you do absolutely nothing and still get rewarded. Just put your financial future in the hands of an algorithm that blindly buys the entire S&P 500, and you’re all set.

I don’t like this idea for several reasons.

Index investing promotes that idea that you don’t need to learn anything about stocks or finance. You set up automatic deposits to dollar cost average into your preferred fund, and never think about money again.

A lot of personal finance books that promote this strategy butter up their readers by saying that index funds are the smartest and safest long-term investment. If you leave your money with Vanguard, you’re smarter than Wall Street.

In reality, you didn’t actually learn a single thing, and you’re still on the bottom of the pyramid when it comes to financial knowledge.