Many investors think the thrill of the latest hot mutual fund or hedge fund makes them sexy products, while the lack of thrill in buying an index fund makes them boring. This might have something to do with the high expenses that come with the hot funds, which provides tons of cash to market their sex appeal. The best index funds, on the other hand, have no such marketing budgets.
Or maybe it just comes down to personal taste, and there’s no shortage of choices – Coke or Pepsi, Budweiser or Miller, Ginger or Mary Ann. Personally, I find index funds very sexy, and I’m not alone. I once asked the Bogleheads, a group of very wise index fund investors, what they found sexy about indexing. Here are some of my favorites.
It’s sexy to know you will beat 99 percent of active investors. Over the long run, active investing has about a one percent chance of beating the low cost index investor. It feels great to be a master of the universe and to effortlessly beat the masses of investors who don’t get the math.