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How should optometrists approach investing their hard-earned money? With thousands of mutual funds and countless investment strategies, deciding can feel overwhelming. In this episode, Evon dives deep into index investing—explaining clearly why passive investing through broad market index funds consistently outperforms active management.

He explores the fascinating history of index funds, the robust academic research behind them, and exactly why an evidence-based, passive approach makes sense for optometrists. Evon also breaks down common misconceptions around "settling for average" and explains how choosing simplicity, lower costs, and broad diversification can significantly boost long-term investment success.

You likely aim to take an evidence-based approach to optometry, and Evon's suggestion is to take the same approach to finance and investing.

Highlights of the Episode:

• What Exactly Are Index Funds?
  Evon defines indexes and index funds clearly, showing how they provide easy access to broad markets at low cost.
• The Fascinating History Behind Index Funds
  Learn how groundbreaking academic research in the 1960s and 70s led to the creation of index funds, and why the initial skepticism turned into widespread adoption.
• Evidence of Index Funds Outperforming Active Management
  Evon shares compelling data, such as the SPIVA Report findings, showing that over 80-90% of active managers fail to beat their benchmark index over long periods.
• Why Active Investing Often Falls Short
  Explaining why consistently outperforming the market through active investing is incredibly challenging.
• Fees and Taxes Matter
  Understand how high fees and tax inefficiencies can significantly erode your returns, making index funds even more attractive.
• Diversification is Your Friend
  Evon details shocking statistics about individual stock performance and shows how index funds naturally diversify your portfolio, increasing your odds of owning top-performing stocks.
• Simplicity is Strength
  Discover why investing doesn't need to be complex, and how simplicity through index investing can lead to better investment behavior and results.

Resources Mentioned:

• Ep 94: Why Active Investment Management Fails with Andrew Berkin, PhD
• SPIVA Report - Year End 2024
• S&P's US Persistency Scorecard - Year End 2023
• Morningstar’s Active/Passive Barometer
• Hendrick Bessembinder (2018): Do Stocks Outperform Treasury Bills?
• Movie: DFA's Tune Out The Noise
• Book: A Random Walk Down Wall Street

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The Optometry Money Podcast is dedicated to helping optometrists make better decisions around their money, careers, and practices. The show is hosted by Evon Mendrin, CFP®, CSLP®, owner of Optometry Wealth Advisors, a financial planning firm just for optometrists nationwide.