Index funds

I invest a lot of my money in Vanguard mutual funds. I have a number of friends who sneer at this, saying, "Oh, but those are just index funds," as if there were something terribly wrong with index funds because they aren't "managed." I usually just say, "precisely."

The reason I invest in index funds is precisely because virtually no one can actually beat the market by "managing" money. There is virtually no scientific evidence that managed funds can systematically out-perform indexed funds, and, since managed funds almost invariably have higher fees than indexed funds, they generally underperform index funds.

If you want more, go read this article in San Francisco Magazine which I came across at Andrew Tobias' site.