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Earn It! Go For Boring

Don't try to beat the market. A passive portfolio yields more in the long run.

Let’s go to the videotape: After the great bull market came crashing down in 2000, stocks went nowhere for more than a decade, according to the major indexes. The S&P 500, which hit 1,527 that year, started 2013 at 1,426. The Nasdaq, which peaked at 5,408 13 years ago, hasn’t come close to that mark, and was recently just over 3,700.

The experts point to these miserable numbers as proof that buy-and- hold investing is dead, and argue that you need highly paid experts to man- age your money through that kind of turmoil. In fact, the key to success during those years was to do nothing. The best approach was what’s called “passive” investing. The very name sounds like an assault on everything Men’s Fitness readers stand for, but look at the track record. Imagine you had the incredibly bad timing to start investing on January 1, 2000, right as the bull market was about to peak. Not trying to time the market or predict winners, you passively invested in broad indexes of U.S. and international stocks, and the U.S. bond market. Assume the standard allocation of 60% stocks and 40% bonds, rebalanced annually. The total return through August 31: 82.4%.

Is Your Money Situation Making You Sick?>>>


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