Mad Money Machine

Be a Couch Potato

James in south Florida alerted me to a great feature in the Canadian MoneySense magazine of Feb/Mar 2008 entitled Child’s Play: The Couch Potato Portfolio in which they describe lazy investing and using passively managed index funds instead of actively managed funds. Here’s a snippet:

Let’s say you have a $200,000 portfolio. This year alone you would save about $4,000 by becoming a Couch Potato investor rather than an investor in actively managed mutual funds. Over a few years, assuming you reinvested all of your savings, the difference would grow and grow, because the money you would be saving would compound on itself. Assuming typical rates of return, the money you would save by becoming a Couch Potato would be more than enough to buy you a luxury car in 10 years’ time even if you were never to invest another cent in your portfolio.

There are several links to click around to get the whole story, but they are worth a look. They compare the performance of the Couch Potato portfolio against the Canadian stock index. Hey, I gotta take a look at making sure I own some of that Canadian stock index! (Canadian stocks might NOT be a part of your international index fund!) Thanks James for the tip off.