I’m writing this so I can stop yelling at the television

Let your money lie on your couch eating all your biscuits.

I enjoy yelling at the television. I know this is a minority hobby, but sometimes I turn on an informercial and just abuse the product and the presenters for ten minutes, and that will set me up for a whole month. Quality time.

Lately I have been annoying my family by yelling at one particular advertisement. It’s not even the infuriating broadband ad (broad… Beans? Aaaarrrggghhhh!?!?) because that’s too stupid to bother yelling at.

It’s the one where the dad is telling his son that he doesn’t want his money lying around eating all his biscuits, like a lazy son, hahahaha... This is so infuriating. You do want your money lying around eating biscuits. Why? Because lying around is cheap. Biscuits are cheap. It’s when someone makes you get up and move around that you start to spend money.

Which is exactly what happens to your money. When it’s managed, the people who manage it need to be paid. They move things around, you get charged fees, and this is not, on average, beneficial to you, the investor.

There is tonnes of evidence that tracking funds outperform managed funds, often even before the higher fees are taken into account. This is the subject of a famous 10-year, million-dollar bet between Warren Buffett and Ted Seides, where Buffett bet on ‘your money lying around eating biscuits’, aka index tracking funds, and Seides bet on a hedge fund which actively manages your money into carefully chosen stocks. Buffet won comfortably and donated the winnings to charity – there’s a great US radio story here about why index funds are excellent and how the bet came about.

Don’t listen to that TV dad. Lazy biscuit-eating investments tend to outperform managed funds. Right, having got that off my chest, I’m hoping I can now simply ignore that advertisement. My family will be very relieved.