The quiet wisdom of index funds.
Why I invest in index funds and stopped trying to beat the market.
The best investment strategy is the one you can stick to for thirty years without checking it. This is almost certainly not the one you are currently excited about.
The case for boring
Index funds are boring by design. They hold everything, they rebalance mechanically, and they do not require you to be right about anything except the direction of human economic activity over long time horizons.
The market is a device for transferring money from the impatient to the patient.
Twenty-five years of SPIVA data says the same thing in different ways: the majority of actively managed funds underperform their benchmark after fees, and the ones that outperform in one decade rarely repeat in the next.
What the data actually says
The persistence of alpha is a measurement problem. When you adjust for luck, survivorship bias, and the changing composition of indices, the signal nearly disappears.
What to do about it
Open an account with a low-cost broker. Buy a total market index fund. Set up automatic contributions. Do not look at it for five years.
The hard part is not the mechanics. The hard part is doing nothing while everything around you is doing something.