Invest to Win in 2007

The best way to “invest to win” is to go in with the idea that you’re here for the long-term, and you want things that will make you money in the long-term.

Let’s face it, unless you’re real good, if you’re stock picking, you don’t have a good chance to beat the market. Even most money managers of mutual funds do not beat the market for a single year, and almost none of them beat it over the long-term.

So does that mean you shouldn’t invest? No, of course not. But what you should do is look up index funds!

What are index funds? Well, they’re basically funds that try to track the market and earn a similar return. This may not bring you huge, 100% returns in one year, but it’ll also shield you from big risk over the longer term.

Why index funds? Well, since they’re not actively managed the fees are generally very low, oftentimes less than 0.5%. That saves you a lot of money if you’re looking over the long haul. Another key thing about index funds rather than individual stock picking is diversification. Let’s say your whole portfolio was in Enron a few years ago… sadly, ask some of their workers how that turned out. However, if you had Enron as a small part in a large portfolio, you’d hardly feel the loss.

So it’s best to go into the year looking long-term, and that’s how you truly “invest to win.” Invest in index funds and let time and compound interest work for you, and I think you’ll be pretty happy.