In my last post—an update from Day 5—I mentioned that LearnVest’s Bootcamp had provided me with a great rundown of the stock exchange, bonds, index funds… the list of arcane concepts was endless. Although I’m not quite a financial whiz, after just a few lessons with the Bootcamp, I’m already starting to feel more confident with these new concepts.
Only a few days have passed since then, but I’m already armed with even more knowledge essential to my financial well-being.
I have now completed Lesson 9 which teaches about passive versus active investing.
I discovered that although Index funds (which invest in equity or fixed-income securities specifically to replicate indexes, such as the Standard & Poor’s 500) are considered a passive form of investing, in fact, they can be the most effective way of investing money.
Active investing on the other hand, is when you put your money in the hands of a company who promises to allocate it into stocks and mutual funds as they see fit; however, in the long run, they can never really beat the stock market. Moral of the story? It is in your best interest to buy index funds.
This graph illustrates the performance of both index funds and actively managed funds, and it’s clear which one would be your best bet.
Day 10 was an in-depth lesson devoted to which index funds I should consider, and Day 11 guided me through allocation (how much to invest where).
I appreciated the graphs and charts that supplemented these lessons, which really helped make the concepts more manageable and concrete.
Stay tuned for the last 4 days—I’ve learned so much already, I can’t imagine what more there is in store for me! Check out the bootcamp for yourself!
Link to Part I: Welcome to the Real World!