It has now been about a year since the stock market plunged. During this time, many people have lost wealth. This trend has probably been accelerated by the financial "croupiers", as John Bogle from Vanguard calls them. These are the money managers who give advice to buy and sell mostly in an effort to line their own pockets.
I remember when the stock market started to drop last September. People were panicking, and many investors let their emotions take over. From a rational point of view, it is better to just leave your money in the market long-term and ride out the turbulence. I wrote about this strategy last year. You put your money in index funds and cut out the croupiers and their fees.
Let's say my own IRA last September was at 100%. When the market dropped, I didn't do anything. By around February or so, it was at 65% of the original amount. Again, I just let it be. I checked the other day and now it is back to 95%. Give it a few months and it will be back to 100%, and then keep on growing from there.
In essence, the stock market is just investing in business. Historically, business gives an average return on investment of about 10% a year. If you put your money in an index fund, you are investing in all businesses, and this diversity protects you from the specific risk of one company.
The croupiers make investing out to be harder than it really is. This artificial confusion pads the pockets of money managers and drains the returns of the average investor. The non-professional investor (which is about 99% of the population) would be better served by an index fund and not the advice of a money manager.
