While running the other day I listened to a podcast from Freakonomics about the guy who invented Index Funds.
Mutual Funds are operated by active managers–guys who buy and sell stocks for you. Each time they buy and sell there is a cost. In order to pick stocks that will earn enough to overcome the costs, one has to be incredibly lucky.
Approximately 2-3% of all mutual funds get enough profit to cover cost!
So a very smart guy came along and invented the Index Fund. Index Funds do very little buying and selling of stocks. They buy successful companies listed in Stock Indexes like the S&P 500.
They buy and hold. They let the stock market take over and, on average, they outperform mutual fund managers’ abilities to pick stocks. They also, because they don’t buy and sell much, have very low cost.
Why don’t more people invest in Index Funds then?
Because active, aggressive Mutual Funds are more exciting. You’re doing something! You’re going place! Your betting big!
Index Funds are boring. Nothing happens. They just sit there and wait for forever. Boring.
One thing I’ve notices in life is that the long, boring solution is usually the right one.
Keep this in mind when the Bible repeatedly tells us to be patient, wait on the Lord, and be eternally minded.
No one does this because it’s boring. Nothing happens. It’s more cool to talk about your plans and your machinations and your X-treme, Radical, Revolutionary, Awesomest Faith Everness.
Think of the OT people who got impatient and how it cost them: Abraham not getting his son on time, Jacob and Rachel not getting their son, and Saul not waiting for Samuel.
God is eternal. He takes a long time. Be patient. Wait for Him. Watch out for the itch to DO SOMETHING! More than likely, you’ll just lose.
Wait. Be patient. Slow down. Do the right, boring thing. In the end, you’ll reap a huge harvest.