Passive vs Active Investing
People always forget about costs, taxes and inflation when looking at real returns over time, they chop into returns in a big way, especially when compounding the end result.
4.8% annually vs 2.0% annually, over 30 years is a HUGE difference.
#Thorp
People always forget about costs, taxes and inflation when looking at real returns over time, they chop into returns in a big way, especially when compounding the end result.
4.8% annually vs 2.0% annually, over 30 years is a HUGE difference.
#Thorp
Chart from A Man for All Markets by Thorp.
Another one:
Another one:
A very simple example:
$10,000 into each scenario with zero contributions over 30 years nets:
$65,230 (passive, 4.8%)
vs
$22,080 (active, 2.0%)
Passive beats active by ~3x, when compounded over 30 years with lower fees, taxes and inflation.
$10,000 into each scenario with zero contributions over 30 years nets:
$65,230 (passive, 4.8%)
vs
$22,080 (active, 2.0%)
Passive beats active by ~3x, when compounded over 30 years with lower fees, taxes and inflation.
Short term taxes really eat away profits, in a major way, over time.
Chart: A Man for All Markets
Chart: A Man for All Markets
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