The charm of index funds (II.)--from the Buffett Recommendation Index Fund

⊙ Huaxia Fund When a more than 30-year-old investor asked for the best investment idea for the age group, Buffett said: "I will use the money to buy Low-cost index funds." Unless I am buying during Great bull market, I am confident that it will perform better ... And I can come back and go on with my work. "Mr Buffett, who specializes in active investment, has a wealth of information in fact: Index funds are suitable for long-term investment," he said. Buffett sees the questioner's age at about more than 30, so he advises him on the investment index. The investment is about 30 years from the age of 30 and retirement by the age of 60. We review the three major U.S. stock indexes for nearly 30 years: The Dow Jones index rose from May 16, 1979 828.5 to May 13, 2009 8,285, dramatically increasing by 10 times times, an average annual growth rate of about 8%; The standard and poor 500 index grew from 98.42 to 883.92, with an average annual growth of 7.59%, with Nasdaq rising from 129.35 to 1664.19 and an average annual growth rate of 8.89%. So is the index investment not suitable for people over the age of 40?　　In fact, in the current a-share market from the top of the bull down more than 50%, 40-year-old people in the expected more than 20 years of investment time, the same can be configured a certain proportion of index funds. Second, choose the right time to buy. Buffett's view is that great bull market's top buy index fund, the risk is very big. But if the market is at the bottom or the middle and the investment risk is fully released, the performance of the index fund is good enough in the recovery process. The Galaxy Securities Fund Research Center data show that as of May 13, in the rebound this year, the standard index funds in average net growth rate of 50.52% far exceed the standard equity fund of 36.28%.　　Therefore, investors in the current market turmoil, the rational allocation of index funds, future earnings can be. Third, the index fund low rates. The management fee for the general active Management Fund is 1.5%, the hosting fee is 0.25%, while the management rate of the domestic index fund is between 0.5%-1.3%, and the managed rate is between 0.1% and 0.25%, of which the ETF and index LOF rates are lower, for example, Shanghai 50ETF (management fee 0.5% , the trusteeship Fee is 0.1%, the level two market transaction fee is exempt from stamp duty, the Commission generally does not exceed 0.3% of the transaction amount.　　Compared to the active management of the Fund, index funds can save about 1% of the management costs each year, that is, representing an additional 1% of the investment income, in the 20 to 30 long-term investment in the power of compound interest, investment results will be very different. Investment do not forget the job. Buffett's words last settled to "continue his work" as advice to all investors who are not investing as a career. After all, investment funds, investment in stocks, is only the way to manage their own wealth, and the root source of their own wealth is the work of the Labor paid. Arrange your investmentPlanning, strict investment discipline, ignoring the market fluctuations, often than stare at the market fluctuations and make their investment emotional tendency to effect better. If you waste your job because of money management or investment, it is more trifles, contrary to Buffett's advice.