Warren Buffet is one of the cautious investors. He is willing to invest on an S&P 500 passive index fund as opposed to entrusting his money to hedge fund managers. He is satisfied with simple long term investments with low costs. He uses the bottom up investment approach which has been gaining returns for investors over the years. In the recent yearly shareholder’s letter Buffet offered some wisdom based on his investment experience. He told the consumers to be wary of product labels. He says that there are too many expensive and mediocre funds that feed off investors. Moreover, many mutual funds lead to poor long term returns because of the high management fees, excessive trading and the risks and opportunity.
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Timothy D. Armour argues that to some extent Warren Buffet is right. It is the high time to challenge the fact that passive index returns are the best for better retirement. The index funds provide no cushion against the down markets but they have their own place. Additionally, despite the fact that trillions of dollars have passed through the passive investments only half of the investors are aware that index funds expose them to 100 percent losses and volatility during market downturns. This may be true but Timothy advises the investors to stop taking chances in their investment. Instead, they should embrace the services of managers who will be actively involved and willing to sacrifice their time to make most returns for them.
Mr. Amour holds a bachelor degree in Economics from Middlebury College. Previously he was an analyst at Equity investment Capital where his work is to deal with telecommunications globally and also in the united states service companies. Tim was elected the chairman of Capital Group one of the world’s leading investment management firms by the board of after the passing on of Jim Rothenberg who was the former Chairman.