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500 returned 7.2%. An investment of $100,000 made in 1998 grew to $280,377 over the 20-year period for an average equity fund investor, while the same amount invested in the S&P 500 grew to $401,694. Even better, an investor who owned an allequity, small value tilted, globally diversified index portfolio would have grown a $100,000 investment to $565,015. Clearly, investor behavior can have a far more negative impact on investments than investors realize.

the folly of ActIve InvestIng The perils of active investing have been well chronicled throughout history. In fact, nearly 300 years ago, a Dutch pictorial book titled “Het Groote Tafereel der Dwaasheid,” or “The Great Mirror of Folly” painstakingly portrayed the fates that befell investors who heavily speculated as the world’s first major stock market crash unfolded. In the 1600s, stock exchanges were formed in Amsterdam, Paris and London to bring together buyers and sellers of shares, mostly in companies relating to trade, banking and insurance centered on maritime expansion in the East and West Indies and along the Mississippi River. The “Tafereel” depicts the promise and ultimate financial devastation experienced by the many investors who became swept up in the allure of amassing quick fortunes in the stock market, or what was called “the wind trade.”

Index Funds: The 12-Step Recovery Program for Active Investors  

This book reveals the potential land mines and pitfalls of active investing and educates readers on the benefits of passive investing with i...

Index Funds: The 12-Step Recovery Program for Active Investors  

This book reveals the potential land mines and pitfalls of active investing and educates readers on the benefits of passive investing with i...