July 4, 2012

Top 10 Investor Errors: Passive vs Active Management

Fifth of ten articles by Barry Ritholtz.

Index investing, the practice of only buying shares in mutual funds that mimic market indexes such as the S&P 500, is a great way to keep management fees low while defeating the urge to "beat the market." Indexes are the market that everyone else is trying to beat.

Happily, even the least-varied 401(k) plan offers at least one or two index funds if they offer mutual funds at all. (Some only offer purchase of company stock, which is a big red flag for employee investors.)