Category Archives: Investing Advice

Saving For Retirement With Passive Index Funds

There is a $1 million wager that Warren Buffett has made. He believes that he can get better returns than hedge fund managers. He said that he will achieve this by investing in the S&P 500 passive index fund. Individuals experienced in this topic believes that Warren Buffet will win the wager. If he does win, the $1 million wager will go to charity. Warren is correct in his opinion that there are many mediocre funds that are short-changing investors. Warren Buffett has an approach called bottom-up investing, where an investor analyzes a company rigorously and then builds a strong portfolio. He also wants to get the word out that its very important for Americans to save for retirement. In a shareholder letter, Warren Buffett recommends to forget about active vs. passive. It is really about the act of delivering long-term returns on an investment.

Also, passive index returns may not be the most reliable path to retirement. Index funds don’t usually have a cushion against the down markets. Warren Buffett states that an investor that put in $10,000 into the S&P 500 index fund 40 years ago, should have more than $500 million today. However, an investor who invested in the active funds of the American Funds would accumulate more money. While no one can really tell which funds will do the best, many investors can predict the trend by careful research and by having discussions with other investors.

Timothy Armour is the Chief Executive Officer and Chairman of Capital Group. He also serves as a Portfolio Manager in the Los Angeles Office. Mr. Armour is also the Principal Executive Officer of the sibling company, Capital Research and Management.

Timothy Armour comes with more that 34 years of experience in investing. He graduated from Middlebury College with a bachelor’s degree in economics. He started at Capital Group, participating in the associates program. Timothy Armour was named chairman of Capital Group in 2015. Since then, he has made the firm successful with his leadership and experience.

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