A well-researched piece of journalism on the history of our Canada Pension Plan and how it is currently being managed.
TL; DW: For a while, we had a passively managed CPP fund. Then we switched to an actively managed fund which currently costs us over a billion dollars to manage each year. The rational for this switch is that an actively managed fund can outperform a passively managed fund. Has it? (No, it has not)
It’s the same thing with your personal finances. All the financial
salespeopleadvisors will tell you to buy actively managed funds because theyget paid morecan beat the market.I fired my first advisor after learning about passive investing and she literally said, “you can’t beat the market if you are the market.” I resisted the urge to request a guarantee that that would happen, but I did track the difference between my actual investments and if I stayed with an actively managed fund with similar holdings. Unsurprisingly, I’m tens of thousands richer today than I would’ve been.
If the market is up or down, fund managers are still going to take their 2.whatever% cut. I much prefer the 0.2% I pay.