Active vs. Passive Investing

The road to financial freedom is through low-cost, passive, automatic investing. Warren Buffett, a billionaire who made his money investing, has always said the vast majority of people would be better off just owning the S&P 500 (which is a passive index fund that invests in the 500 biggest US companies in the stock market) than paying advisors to manage their money. To put his money where his mouth is, in 2007 Warren got a hedge fund (which is the crem de la crem of advisors who charge a lot of money to “beat the market”) to bet him half a million dollars he was wrong. Warren and the hedge fund each contributed $500,000. Warren Buffett put his $500,000 in the S&P 500 for 10 years. The hedge fund invested its $500,000 with its managers and other hedge funds for 10 years. After 10 years the S&P 500 earned THREE TIMES MORE than the hedge fund.  80% of what you need to retire comes from the earnings on your investments, not what you save, so you need to put your cash to work for you and invest in order to achieve financial freedom. However, you also need to manage the costs that eat away your returns. That’s why The Highest Level Wealth Plan uses Wealthfront, a low-cost, automated “robo-advisor” that uses indexes to put your investments on autopilot.  Start investing today.  The retirement you save will be your own.