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The DIY Investor's Guide to Building Your Own Index Fund (And Why It's a Terrible Idea)
Season 1 Episode 39
What if you could skip the index fund and build your own? In theory, you can. In practice…well, it’s a bit like building your own refrigerator. You’ll learn a lot, and maybe even get a working model, but you’ll also discover why the factory-made version is so efficient in the first place.
In this episode, we dive into the peculiar urge to “DIY” the market, and why the exercise can be incredibly educational—even if you never actually follow through. Along the way, you’ll learn:
- The 11 Sectors of the Market: From flashy Tech to steady Utilities, every portfolio starts with understanding the cast of characters.
- How Benchmarks Really Work: Why the S&P 500 is more active (and more tax-efficient) than most people realize.
- The Temptation of Tilts: When to add seasoning like value or small-cap, and when ego is just disguising speculation.
- Building Your Own Fund: How to use sector ETFs to replicate the market—and why rebalancing can become a full-time job.
- Keeping Costs and Ego Down: The S&P’s hidden advantages in cost and tax efficiency, and why humility may be the cheapest asset in your portfolio.
The takeaway? You can build your own index fund. You might even enjoy the process. But the real lesson is what it reveals: index funds are masterpieces of design, combining diversification, tax efficiency, and ruthless discipline—all while letting you spend your time on things that matter more than spreadsheets.
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Published on 2 weeks ago