Fund

Other than the system of examination, VW and I did have some spare time to discuss other casual issues.

For example, investment.

Don’t be surprised. Even genuine academics like VW need savings and investment in order to prepare for the future. Although our professor of hepatology always claims that he is an idiot of finance and stock market, what he does proves that he is the most intelligent amateur.

“I just put my money on index fund.” He said with some hesitation, “Em… I know you are against putting money on mutual funds.”

“Yes and no,” I smiled, “I am against most forms of mutual fund because the management fee is often high, but not many fund managers do consistently perform better than the reference index. In fact, even if we could find a highly capable fund manager, I’m not sure what we should expect from him. It is not a good idea for him to be hard working and keep managing the fund – if the portfolio is a good one to start with, you don’t need to change it very often; every transaction has a cost. But, if he just sits back and spends an hour on the portfolio every month, why couldn’t I take up the task myself?”

VW nodded, and I went on, “But index fund is a different story. The management fee is much lower, and frequent transaction does not exist. I mean, if one has no time to take care of his own money, index fund is probably the best choice. But, I must say I still believe it is better to invest ourselves. After all, if we care to spend time choosing books for our shelf and dresses for our closet, why shouldn’t we spare a trace of effort and decide where to put our money to prepare for our retirement?”