Lesson One · The Default Answer
An is the smart default for most investors.
An employs a manager who tries to beat a by picking stocks. A just holds what the benchmark holds. Over 10-year windows, roughly 85% of active managers underperform their benchmark after fees. Not because managers are stupid — because fees compound. A 1% fee drag per year compounds into a ~20% hole over 30 years. The wins not by being clever but by costing almost nothing.
“Don't pay someone 1% a year to lose to the index they're supposed to beat.”