“Beating the stock market isn’t easy. Many Canadian investors act like it is”
The article goes on to say:
“Plenty of investors in recent years have awakened to the shaky track record of the stock picking business.”
“The shift to passive investing has been driven, in part, by the relatively disappointing and inconsistent performance record of active managers,” Sean Freer, director of global equity indices at S&P Dow Jones Indices, wrote in a recent report.”
I thankfully fired my money manager about 15 years ago, around the same time I started this blog, and haven’t looked back.
The case for indexing is very clear: get market-like returns less puny fees and ride the coattails of the big cap-weighted companies in a reputable index. Yet in Canada, there are ways to Beat the Index / TSX (BTSX) and you can read more about that approach in that link above. That said, I don’t know any investor that follows BTSX rules explicity year-after-year. This means, in any given year, a BTSX-related portfolio might trail or exceed the index.
In the U.S., my personal experience is it’s quite hard to beat the S&P 500 index over a long-term investing horizon. Even the TSX index is no match for the mighty U.S. index when it comes to returns.
Whether you decide to go all-in on passive cap-weighted investing, become a bit of a hybrid investor like myself, or stay true to your own individual stock and bond-picking convictions, one thing is clear: the fees you pay to others in any money management activity is money you will never see again. So, choose wisely.
“…Unlike mutuals though, ETFs saw net sales across asset classes with bonds leading the long-term funds with $1 billion, followed by equity with $334 million, balanced with $188 million, and speciality with $18 million.”
My name is Mark Seed - the founder, editor and owner of My Own Advisor. As my own DIY financial advisor, I'm looking to start semi-retirement soon, sooner than most. Find out how, what I did, and what you can learn to tailor your own financial independence path. Join the newsletter read by thousands each day, always FREE.