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Fiology Lesson 13: Presenting the case in support of broad market index fund investing.

Passive Index Fund Investing to Build Wealth

Passive index fund investing is a preferred method of wealth-building by many pursuing Financial Independence. Most people do not have the time and motivation to conduct the in-depth research to confidently pick individual stocks in companies that will make them Financially Independent.

We would need to know if a stock is undervalued or overvalued, how it compares to competitors in the sector, the condition of that sector in the current economic cycle, and several other telltale signs that must be in alignment to indicate a screaming buy.

Even if a person had the resources available to attempt this endeavor, chances are they would be less successful than if they simply invested assertively in a low-cost broad market index fund.

This lesson focuses on why it is important to consider using passive index fund investing to do the bulk of the heavy lifting in the stocks portion of your Financial Independence portfolio.  




Take Action:

  • Considering the information discovered in this lesson, review your investment holdings and understand the true cost of their fees over time as compared to that of a low-cost broad market index fund. Determine if you feel you would be better served with the majority (if not all) of your holdings in passively managed index investments. Do only what you feel comfortable based on your level of understanding and willingness to make the change.

Additional Resources:

In the Financial Independence Community, most consider JL Collins’ approach to investing in stocks the benchmark route. If you want an approach that may be slightly less simple, look into the 2 Funds for Life strategy by Paul Merriman. He, too, believes investing should be easy to implement and he proposes his 2 Funds for Life strategy can perform slightly better. Remember, regardless of what approach you take, continue to justify your approach based on your own research and life circumstance.


“Don’t look for the needle in the haystack. Just buy the haystack!” – John C. Bogle is an educational resource designed to teach Financial Independence (FI). We scoured the internet to find content from the best and brightest of the FI community and created lessons covering the critical concepts.

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