Lootman wrote:A simple example. The S&P 500 index had an intraday low of 666 in March 2009. It is currently at about 4350. If you bother to work that out it comes to an annualised return of 17% a year, before dividends. Throw in the dividends and that is more like 19% annualised from an index fund. There was also a currency gain on top of that for a sterling-based investor which takes you over 20% a year. So there is a case of a "passive" approach beating just about every active investor whilst spending almost nothing and never getting out of his armchair.
If anyone is interested, the other day the S&P 500 passed the level of 4,666. That number may not sound like a significant number such as, say, 5,000. But it has one important feature: In March 2009 the index hit its financial crisis low of 666, so it has now increased sevenfold in a little less than 13 years.
In annualised terms that is a return of between 16% and 17%. This excludes dividends which would add another 2% a year or so. And a small FX gain as well.
Now not many people would have gone all-in at a time when we thought the world was ending. But then history shows that it is best to buy when there is blood in the streets. And this history shows you can get stonking gains from something as ordinary as an index fund.
No idea what happens in the next 13 years. I will bet it won't be another seven-fold increase. But I am comfortable with my core holding in VUSA, which is now far and away my largest position.