It's our undying belief that having the correct investment philosophy leads to long-term financial success. Having the wrong investment philosophy is principally caused by financial puberty and leads to disappointing results.

Here is the investment philosophy of the Index Investing Show and all of the investment advisors that are part of our network.

1) Build Your Portfolio on a Solid Foundation
Mutual funds and exchange-traded funds (ETFs) that follow market indexes routinely outperform the vast majority of actively managed mutual funds. Translation: This means that index funds should be the foundation of your investment portfolio. You avoid contaminating your investments with fund managers that job hop, style drift, window dress, hyper-trade securities, underperform the market and closet index. Also, you get to keep more of your performance returns by paying lower expenses.

2) Diversify Your Portfolio
Diversification won't fully protect you from the risk of market losses, but it can reduce the impact of an event driven shock or market downturn. Having a portfolio that has broad exposure to the major asset classes like Domestic and Foreign Stocks, Commodities, Bonds, Real Estate Investment Trusts (REITs), and Treasury Inflation Protected Securities (TIPS) is a good way to be diversified. Use low cost index funds and index ETFs to get market exposure to these major asset classes.

3) Minimize Your Trading Activity
Some of Wall Street's best known professional traders have evaporated billions of dollars on errant trades. (See Amaranth Advisors, Long-Term Capital Management, and MotherRock) Unfortunately, amateur traders aren't much better. Hyperactive trading causes elevated transaction costs/brokerage commissions; it increases the chances of making errors in judgment, and raises the potential for higher tax liabilities. Trading should be reserved for a program of regular investment, rebalancing your portfolio, reducing risk, or to invest money when opportunities for significant capital growth are present.

4) Lower Your Tax Bill
One technique to lower the tax bite is to coordinate your investments into the correct mix of taxable and tax-deferred accounts. Another strategy is to own tax-efficient investments like index funds and ETFs that reduce the Uncle Sam's take. Give yourself a tax break!

5) Avoid the Danger of Financial Puberty
Financial puberty is a three part problem caused by behavioral disorders (greed, fear, overconfidence, etc.), a lack of education, and having the wrong investment philosophy. Sadly, many investors and financial professionals have become infected with financial puberty, which explains the reason why they continue to consistently underperform the market.

6) Simplify Your Life and Let the Indexes Do the Rest
Do you want more freedom? Then index investing is the answer! Instead of becoming enslaved to stock picking, chart reading, chasing mutual fund managers, and other unproven investment strategies, index investing saves you time, money, and gives you peace of mind. It allows you to pursue other interests in life. Spend more time with your family and friends!

7) And If You Still Insist on Stock Picking, Speculative Trading or Gambling on Fund Managers...
...Only do it with money you can afford to lose or with money you don't care about and only do it after you've laid the foundation of your investment portfolio to a broadly diversified mix of index funds FIRST. Remember: Index first, everything else second!

8) Hire the Right Investment Advisor
If you don't possess the confidence or the time to manage your investments, then hire an investment advisor that strictly adheres to our investment philosophy, which is now your investment philosophy.