Broker Check

Active vs. Passive Investing in Retirement

| August 24, 2016

A debate has been ongoing for many years about the merits of active management vs. passive investing. Many people are convinced that one or the other of these approaches will produce superior results over time, at a given risk level. Data produced to support the two positions has usually focused on the total return of a lump-sum investment over a selected period of time.

What is rarely compared are results when regular withdrawals are being taken, such as may occur during retirement. Such an analysis could be of great importance if your investment plans include taking income distributions.

In 2015, American Funds published a white paper showing the hypothetical results that might have been achieved by a lump sum investment in several of their mutual funds, compared with passive strategies, both assuming monthly systematic withdrawals were taken, during the fifteen-year period from December 31, 1999 through December 31, 2014.

The results are rather astonishing. Please contact me if you would like to discuss the report, and how active management strategies might benefit you.

Click here to read the report