One of the questions I get asked the most often is, “What should I invest in?” While the right answer depends on a host of factors including your risk tolerance, financial goals, and more, I’ve slowly converged toward one asset class in particular—stocks/equities. I’ve always been a fan of investing in stocks (via index funds/ETFs) and I’m only becoming more convinced of this over time.
But my reasoning for why I prefer stocks over most other risk assets has changed. Historically, if you had asked me why I liked stocks it was because they were a low-hassle way to get exposure to some of the best businesses around the world. For very little effort on your part, you can be a partial owner of a large number of global companies that help you build wealth while you sleep. What’s not to like?
While this logic still holds today, my reasoning for liking stocks over other asset classes has evolved. The issue has nothing to do with what stocks get you, but what they don’t get you. What I’m talking about is high fees and predatory investment practices. Unlike other asset classes where high fees and lack of transparency are the norm, this is far less common when it comes to buying stocks.
And we have one person we should thank for this development—Jack Bogle. Jack, who was the founder of Vanguard, did more to reduce fees in the investment industry than anyone else. According to Eric Balchunas in The Bogle Effect, retail investors have saved over $1 trillion in total because of Bogle’s efforts. Not only did Bogle reduce fees for investors at Vanguard, but he inadvertently brought down fees for the rest of the investment management industry as well. This is why we all have access to cheap, easy
