Not long ago, Warren Buffet made a massive wager of $1 million to charity. The terms of this wager were that he would pay $1 million to a charity if he could not out perform a team of hedge fund managers in investments. To increase the difficulty of this wager, he announced that he would only be investing in S&P 500 passive index fund. At this point, it looks as if Buffett will be collecting on this wager.
Passive index funds are a great stock to invest in and allow to grow over a long period of time. They are a low yield stock, but are considered to be less risky than high yield stocks. Since the stock involves a low investment, there is less risk, and less loss in the event the stock were to diminish in value.
According to Tim Armour, what Buffett has to say is right on the money. It is impossible, to know the outcome of a stock, and investing small amounts into multiple low end stocks could prove more beneficial than investing a large amount into a well-known popular stock.
Tim Armour is a portfolio manager and CEO of Capital Group. He has over 34 years of experience as in investor. In the past, he has covered telecommunications and equity investment.
Tim is also the chairman of Capital Group Companies Management Committee. Armour is an active member of the investment community, and frequently gives advice to the online investment reader community.
Read more on Medium.com