An index fund tracks a market index like the S&P 500 and charges minimal fees. The majority of actively managed funds, where a professional picks stocks, underperform their benchmark over a 10-year period after fees. You don’t need to pick winners. Own the whole market cheaply and stay in it.
The hard part is believing that doing less earns more. Wall Street sells stock-picking skill as the thing worth paying for, and the scorekeeping says that skill rarely survives its own price tag.
S&P Global has published its SPIVA scorecard, the standard measure of active funds against the indexes they try to beat, for 25 years. The pattern holds in nearly every edition. In 2025 alone, 79% of active large-cap funds trailed the S&P 500, and fewer than one in six beat it over the full decade. Winners don’t stay winners either. Funds that top the charts in one stretch rarely repeat in the next.
Fees drive most of the gap. An active fund might charge 1% of your balance every year, while broad index funds charge as little as 0.03%. The manager has to beat the market by that difference, every year, before you earn a dime of outperformance. Compounded over 30 years, a 1% annual fee consumes roughly a quarter of what your portfolio would have grown to.
Acting on it takes three moves. Open an account at any major brokerage, buy a total market or S&P 500 index fund, and automate a monthly contribution. Before buying, check the expense ratio, the annual fee every fund discloses. Under 0.1% is the right neighborhood for a broad index fund. Then audit your 401(k). If your money sits in an actively managed option, compare its 10-year record and fees against the plan’s index choices, and move if the numbers tell you to.
Boring wins this game. The investor who buys the whole market and leaves it alone for 20 years finishes ahead of most professionals paid to beat it.
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