" Why I Index?"-Commonsense observations !

Something that I had read on passive indexing a couple of years back...these happen to be " Why I Index? " kind of general observations from a fee-only financial advisor based in America.

According to me the following " Why I Index? " are typical issues that are applicable in principle to all geographies. They should be kept in mind by investors / advisors while deciding their strategic asset allocation.

I index because I grew tired of being disappointed by active funds that delivered wonderful returns right up until the day I invested.

I index because for years I only discovered funds that I should have owned, not that I should own.

I index because I enjoy my free time and have not seen any overall gain from the hours spent analyzing active funds.

I index because it occurred to me that those who argue the strongest for active funds tend to be the same people who benefit the most if I buy active funds.

I index because I trust indexes more than active managers. Indexes do not get bored, get overconfident, quit, die, or defect to other firms.

I index because indexes are transparent. I know what my money is invested in and why.

I index to eliminate risk without sacrificing return. The high probability that an active fund will not keep up with its benchmark adds uncompensated risk.

I index because as my assets grow I prefer simplicity to complexity.

I index because as I get older cost matters more to me.

I index because I now realize that all I need is the return of index funds to achieve my financial objectives. And that is what really matters.