Perhaps you’ve heard that low-cost passive index mutual funds tend to perform better than funds in which managers actively pick stocks. By my calculations, however, over any given year, roughly 42 percent of actively managed funds outperform the low-cost index. So buying the index fund seems to be shooting for being only slightly better than average. Yet don’t most of us want to be an A student at the top of the class?
I’m going to try to mislead you, but it’s for a very good reason. What I have for you is a U.S. stock fund that not only has beaten the S&P 500 index, it’s nearly certain to continue doing so in the long run. For now, I’m going to call this mutual fund the Super-Secret Fund, or SSF for short.
Target-date funds are growing in popularity among investors in workplace retirement plans because they're so easy to manage. You pick a retirement date, and the mix of investments automatically adjusts to a more conservative allocation as you move closer to that date. No muss, no fuss.
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