Podcast: Why Invest in Index Funds?

In this episode…

We break down the reasons why index funds are recommended as one of the best ways to invest for financial independence.

If you’re new to investing, index funds are a very simple way to invest in the sharemarket.

You effectively own a slice of all the largest companies (say the ASX 300 for example), and benefit from the returns they deliver over time.  But you’ll learn that and a whole lot more in the episode! 🙂

Listen to the show…

(or download the mp3 file)

Discussion points…

• You get what you don’t pay for?  (03:00)
• How turnover and tax affects your returns  (04:30)
• Diversification, sectors and the future  (09:37)
• The biggest winners and distribution of returns  (12:46)
• Active managers and the SPIVA reports  (16:04)
• Harvesting business returns  (19:33)
• What is self-cleansing?  (21:01)
• The efficiency of markets  (25:58)
• Difference between ETFs and index funds  (31:51)
• Listener Question:  Does philanthropy play a role in your FIRE journey?  (37:07)

Resources…

• The Skew, by Irrelevant Investor
• My Changing Thoughts on Index Funds in Australia
• SPIVA Report 2019 (PDF)

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Do you have something to add to this discussion?  Share your thoughts in the comments below…