The link with this post will take you to a YouTube video that dramatizes the perils of investing in a handful of actively managed mutual funds. For those who prefer words to film, here’s the same story in prose. When you invest in stocks or bonds, you can do so either through passive index funds that simply own (or replicate) all or part of the total stock or bond market, or through “active” managers that attempt to outperform the market return and charge relatively high fees. If you hire the latter, you are incurring “active risk”: the risk that your […]