Warren Buffett bet $1 million dollars (proceeds to will be given to charity) that he can achieve a larger investment return than a group of hedge fund managers. He claims he will be able to do this by investing in an S&P 500 passive index fund.
Timothy Armour, financial expert, acknowledges that Mr. Buffet is correct in his stance that the number of expensive and low quality funds is detrimental to investors. Simple and low cost investments are better in the long term, so this approach of bottom-up investing has historically achieved great results.
Timothy Armour states that people need to be more aware of product labels and avoid mutual funds that provide small long-run returns due to large management fees and overtrading. It is not about active or passive but rather long-term investment returns and keeping costs low. Index returns are good when used responsibly, but they can be risky in down markets. The most important thing an investor can do is build a safety net.
On average, an actively managed fund performs worse than passive investments. That said, there are exceptions to this if the investor knows what they are doing. For example, putting $10,000 in the first S&P 500 index fund would have produced over half a million dollars today. Putting in the time and research to learn which funds to invest in is essential for this type of payout. Timothy Armour realized that you need to ignore all high-cost funds and instead focus on locating fund manages who are investing a lot of their own money.
Timothy Armour’s firm has 86 years of experience and is proof there is nothing random about success in the market. They have averaged 1.47 percentage points above relevant index benchmarks annually.
He received his Bachelor’s degree from Middleburg college. He has over 30 years of experience in investment at the Capitol Group. He is now the Chief Executive Officer of Capital Group and was named Chairman in 2015.
Timothy Armour has noticed dramatic changes in the market following Trump’s inauguration. He believes that Trump will end the slow rates of economic growth and spur a new movement of investment success.