Broadly speaking, there are two kinds of mutual funds: actively managed funds and index funds. Actively managed funds are run by investors managers who make frequent buy and sell decisions with the specific intent of beating a certain market average. Index funds, on the other hand, are significantly more stable in terms of what they own: the index that they track. As such, index funds will always perform microscopically poorer than the relevant index, since they subtract some operating expenses. On the other hand, actively managed funds may beat or under-perform the return garnered by the benchmark index, in many cases by a significant margin. Over the long-term, very few professional managers consistently beat their index. Yet some still do. How do you prefer to invest?
Index Funds: Be like the market
From Michael Rubin, About.com Guide July 3, 2009
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You absolutely right about nobody beat index. But if ask “How do you prefer to invest?” My answer is I prefer index annuity it is much better than just index fund because guaranty and more gain . Nobody can beat index annuity. If best product for now in combination safety and gain. Sincerely Eugene.
Buyer beware of the index annuity. There are many “hiccups” that can occur to take away the guarantees if you are not careful.
Bc of their low fees I have been using Vanguard’s 2020 Target Fund that is all indexes & bc it has stocks & bonds it has given a balanced return. I am also considering investing regular funds through VG using Index funds.