How to invest

SPIVA investing scorecard

The question is it better to be an active investor, or passive?

"From the SPIVA Mid-Year 2016 Report (emphasis mine):

During the one-year period ending June 30, 2016, 84.62% of large-cap managers, 87.89% of mid-cap managers, and 88.77% of small-cap managers underperformed the S&P 500, the S&P MidCap 400, and the S&P SmallCap 600, respectively.

The figures are equally unfavorable when viewed over longer-term investment horizons. Over the five-year period through June 30, 2016, 91.91% of large-cap managers, 87.87% of mid-cap managers, and 97.58% of small-cap managers lagged their respective benchmarks.

Similarly, over the 10-year investment horizon, 85.36% of large-cap managers, 91.27% of mid-cap managers, and 90.75% of small-cap managers failed to outperform on a relative basis."

I have little care what others do, but I will say that it makes little sense to follow active investment profile if it means higher costs, and more work. UNLESS - you need the intellectual stimulation of the active investment world, and you are willing to suffer the likelihood of lower returns on your investments. 

Passive investing in index funds is no brainer, and requires no "balancing" of investments over time. You simply balance the investments each month when you add more money to your investments, then set the controls for your long term goals. At the end of the year, look over your portfolio, make sure it is roughly mirroring your model portfolio, then, if necessary, adjust your investing during the next year. Lather, rinse, repeat. I have never needed to actually move money from one account to anther, the investing is that simple.

On the other hand, the active mode requires constant rejiggering to make things work, and to keep the investments in balance. A constant scanning of investments, and investment managers to determine if they can beat the market indexes.