Simple Yet Inevitable Wealth Creation

It goes like this.....

Facts:

1. Investing costs money.
2. Most people invest their money in mutual funds, either directly or wrapped in a more costly and not understood insurance or annuity product.
3. Mutual fund managers typically charge fees of 1% or more (deducted from return) for attempting to buy and sell the right securities at the right time.
4. For every security bought, there is a seller who believes exactly the opposite as the buyer at the same price and time; in total, it's a zero sum game if you had no fund fees, but a negative sum game with fund fees.
5. Countless academic studies over the past two decades have proven that no one in the history of investing has been able to outperform the market (net of expenses) over a long period of time by correctly picking securities or timing the market. If someone could do it successfully, they would not be doing it for you.

Conclusions:

6. It's dumb to pay fund managers to do something that has proven to be impossible to do.
7. The best rate of return one can hope for is the broad market return.
8. Investors should try to capture as much of the broad market return as possible.
9. Passive investment funds are the best way to capture the market return because they are the most inexpensive and broadly diversified.
10. Investors should use passive investment management with proper asset allocation.

TA-DA!