Warren Buffett made a claim that he could reap more returns from investing in an S&P 500 passive index fund rather than in a group of hedge fund, a point that Timothy Armour disputed. Tim Armour noted that it is important for individuals to save for their retirement by investing in cheaper and longtime investments. According to Tim, Studying a company thoroughly and building a long lasting investment is a sure and proven way to reap big for investors.
Timothy advocates for cheaper and long-term returns by advising investors to be well informed about an investment area before risking their resources in it. He noted that risks and costs of passive investments are usually under looked. Many firms have a high cost of management and excessive trading resulting in low returns at the end. According to research done in 2016 on more than 1200 investors, only 50 percent were fully informed of many losses and risks they were exposed to during low seasons. This is a good reason to rule out the idea that passive index return is the ideal way to invest.
Tim noted that comparing the two investment options; there is a likely hood of reaping from each of them, though hedge funds would fetch more. He explained that Capital Group had been in existence for 86 years with 18 equity funds, which average at 1.47 percent above the market rate annually after all expenses in all seasons.
About Timothy Armour
Timothy Armour is an American Economist and a capital market enthusiast based in Los Angeles. He attended Middlebury College where he studied economics. Tim has over 32 years’ experience in investments. His career started at Capital Group, a financial services provider where he worked as the Associates Program’s participant. Armour rose through the ranks to become chairman and principal officer, a position he holds to date. He also heads the Capital Group Companies Management Committee.