--- title: "Meaning & Key Takeaway of: ... the best way to own common stocks is…" description: "\"... the best way to own common stocks is through an index fund.\" — Warren Buffett" image: "https://sms4smile.com/quotes/i/685/warren-buffett-183_active-management_the-best-way-to-own-common-stocks-is-thr_2493326.png" --- # ... the best way to own common stocks is through an index… ![“... the best way to own common stocks is through an index fund.” quote by Warren Buffett](https://sms4smile.com/quotes/i/685/warren-buffett-183_active-management_the-best-way-to-own-common-stocks-is-thr_2493326.png) [Download](https://sms4smile.com/quotes/i/685/warren-buffett-183_active-management_the-best-way-to-own-common-stocks-is-thr_2493326.png) [Open image](https://sms4smile.com/quotes/i/685/warren-buffett-183_active-management_the-best-way-to-own-common-stocks-is-thr_2493326.png) > “... the best way to own common stocks is through an index fund.” [Warren Buffett](https://sms4smile.com/quotes/author/warren-buffett/) ## About This Quote This interpretation was drafted with AI assistance. It is one reading of the quote, not the author's own explanation. Investing in a diversified index fund is the simplest, most reliable way for most people to grow wealth. **In simple terms:** Buy an index fund for steady, low‑effort returns. Key Takeaway Prefer passive investing. Themes finance investment simplicity risk management wealth building Mood practical educational Type financial advice When to use this quote - retirement planning - college savings - personal finance advice Key Concepts market efficiency long‑term growth cost‑effectiveness Questions to Reflect On - How does diversification reduce risk? - What are the fees associated with index funds? A Different Perspective Index funds still subject to market downturns. ★ ★ ★ ★ ★ No ratings yet [Active management](https://sms4smile.com/quotes/about/active-management/) [Best way](https://sms4smile.com/quotes/about/best-way/) [Customer](https://sms4smile.com/quotes/about/customer/) [Index funds](https://sms4smile.com/quotes/about/index-funds/) [Investing](https://sms4smile.com/quotes/about/investing/) ## Related quotes > [Most investors, both institutional and individual, will find that the best way to own common stocks (shares') is through an index fund that charges…](https://sms4smile.com/quotes/warren-buffett/most-investors-both-institutional-and-individual-will-find-that-the/) [Warren Buffett](https://sms4smile.com/quotes/author/warren-buffett/) > [Most investors would be better off in an index fund.](https://sms4smile.com/quotes/peter-lynch/most-investors-would-be-better-off-in-an-index-fund/) [Peter Lynch](https://sms4smile.com/quotes/author/peter-lynch/) > [By periodically investing in an index fund, the know-nothing investors can actually outperform most investment professionals.](https://sms4smile.com/quotes/warren-buffett/by-periodically-investing-in-an-index-fund-the-know-nothing-investors/) [Warren Buffett](https://sms4smile.com/quotes/author/warren-buffett/) > [A low-cost index fund is the most sensible equity investment for the great majority of investors. My mentor, Ben Graham, took this position many…](https://sms4smile.com/quotes/warren-buffett/a-low-cost-index-fund-is-the-most-sensible-equity-investment-for-the/) [Warren Buffett](https://sms4smile.com/quotes/author/warren-buffett/) > [The key aspect of an index fund is that many of them, not all of them, but many of them are extremely cheap.](https://sms4smile.com/quotes/william-j-bernstein/the-key-aspect-of-an-index-fund-is-that-many-of-them-not-all-of-them/) [William J. Bernstein](https://sms4smile.com/quotes/author/william-j-bernstein/) > [After a lifetime of picking stocks, I have to admit that Bogle's arguments in favor of the index fund have me thinking of joining…](https://sms4smile.com/quotes/jim-cramer/after-a-lifetime-of-picking-stocks-i-have-to-admit-that-bogle-s/) [Jim Cramer](https://sms4smile.com/quotes/author/jim-cramer/) > [If you invested in a very low cost index fund - where you don't put the money in at one time, but average in…](https://sms4smile.com/quotes/warren-buffett/if-you-invested-in-a-very-low-cost-index-fund-where-you-don-t-put-the/) [Warren Buffett](https://sms4smile.com/quotes/author/warren-buffett/) > [The commission of the investment sins listed above is not limited to 'the little guy.' Huge institutional investors, viewed as a group, have long…](https://sms4smile.com/quotes/warren-buffett/the-commission-of-the-investment-sins-listed-above-is-not-limited-to/) [Warren Buffett](https://sms4smile.com/quotes/author/warren-buffett/) > [The best way in my view is to just buy a low-cost index fund and keep buying it regularly over time, because you'll be…](https://sms4smile.com/quotes/warren-buffett/the-best-way-in-my-view-is-to-just-buy-a-low-cost-index-fund-and-keep/) [Warren Buffett](https://sms4smile.com/quotes/author/warren-buffett/) > [Index funds have regularly produced rates of return exceeding those of active managers by close to 2 percentage points. Active management as a whole…](https://sms4smile.com/quotes/burton-malkiel/index-funds-have-regularly-produced-rates-of-return-exceeding-those/) [Burton Malkiel](https://sms4smile.com/quotes/author/burton-malkiel/) > [Experience conclusively shows that index-fund buyers are likely to obtain results exceeding those of the typical fund manager, whose large advisory fees and substantial…](https://sms4smile.com/quotes/burton-malkiel/experience-conclusively-shows-that-index-fund-buyers-are-likely-to/) [Burton Malkiel](https://sms4smile.com/quotes/author/burton-malkiel/) > [The simple index fund solution has been adopted as a cornerstone of investment strategy for many of the nation's pension plans operated by our…](https://sms4smile.com/quotes/david-f-swensen/the-simple-index-fund-solution-has-been-adopted-as-a-cornerstone-of/) [David F. Swensen](https://sms4smile.com/quotes/author/david-f-swensen/) > [Assuming that the future is like the past, you can outperform 80 percent of your fellow investors over the next several decades by investing…](https://sms4smile.com/quotes/mark-hulbert/assuming-that-the-future-is-like-the-past-you-can-outperform-80/) Mark Hulbert > [A minuscule 4 percent of funds produce market-beating after-tax results with a scant 0.6 percent (annual) margin of gain. The 96 percent of funds…](https://sms4smile.com/quotes/david-f-swensen/a-minuscule-4-percent-of-funds-produce-market-beating-after-tax/) [David F. Swensen](https://sms4smile.com/quotes/author/david-f-swensen/) > [Still, I figure we shouldn't' discourage fans of actively managed funds. With all their buying and selling, active investors ensure the market is reasonably…](https://sms4smile.com/quotes/paul-samuelson/still-i-figure-we-shouldn-t-discourage-fans-of-actively-managed-funds/) [Paul Samuelson](https://sms4smile.com/quotes/author/paul-samuelson/) ## More by Warren Buffett > [To invest successfully over a lifetime does not require a stratospheric IQ, unusual business insights, or inside information. What's needed is a sound intellectual…](https://sms4smile.com/quotes/warren-buffett/to-invest-successfully-over-a-lifetime-does-not-require-a/) [Warren Buffett](https://sms4smile.com/quotes/author/warren-buffett/) > [“Be fearful when others are greedy, and be greedy when others are fearful.”](https://sms4smile.com/quotes/warren-buffett/be-fearful-when-others-are-greedy-and-be-greedy-when-others-are/) [Warren Buffett](https://sms4smile.com/quotes/author/warren-buffett/) > [Making money isn't the backbone of our guiding purpose; it is the by-product of our guiding purpose.](https://sms4smile.com/quotes/warren-buffett/making-money-isn-t-the-backbone-of-our-guiding-purpose-it-is-the-by/) [Warren Buffett](https://sms4smile.com/quotes/author/warren-buffett/) > [We set no volume goals in our insurance business generally-and certainly not in reinsurance-as virtually any volume can be achieved if profitability standards are…](https://sms4smile.com/quotes/warren-buffett/we-set-no-volume-goals-in-our-insurance-business-generally-and/) [Warren Buffett](https://sms4smile.com/quotes/author/warren-buffett/) > [Everybody's got a different circle of competence. The important thing is not how big the circle is. The important thing is staying inside the…](https://sms4smile.com/quotes/warren-buffett/everybody-s-got-a-different-circle-of-competence-the-important-thing/) [Warren Buffett](https://sms4smile.com/quotes/author/warren-buffett/) > [It is better to point out your own mistakes than have somebody else do it.](https://sms4smile.com/quotes/warren-buffett/it-is-better-to-point-out-your-own-mistakes-than-have-somebody-else/) [Warren Buffett](https://sms4smile.com/quotes/author/warren-buffett/) > [I've read about all the sales today. If you're an auto dealer, you're feeling it. If you're a furniture retailer like we are, you're…](https://sms4smile.com/quotes/warren-buffett/i-ve-read-about-all-the-sales-today-if-you-re-an-auto-dealer-you-re/) [Warren Buffett](https://sms4smile.com/quotes/author/warren-buffett/) > [I was lucky enough to be born in a time and place where society values my talent, and gave me a good education to…](https://sms4smile.com/quotes/warren-buffett/i-was-lucky-enough-to-be-born-in-a-time-and-place-where-society/) [Warren Buffett](https://sms4smile.com/quotes/author/warren-buffett/) > [The most common cause of low prices is pessimism - some times pervasive, some times specific to a company or industry. We want to…](https://sms4smile.com/quotes/warren-buffett/the-most-common-cause-of-low-prices-is-pessimism-some-times-pervasive/) [Warren Buffett](https://sms4smile.com/quotes/author/warren-buffett/) > [The reaction of weak management to weak operations is often weak accounting.](https://sms4smile.com/quotes/warren-buffett/the-reaction-of-weak-management-to-weak-operations-is-often-weak/) [Warren Buffett](https://sms4smile.com/quotes/author/warren-buffett/) > [What you really want to do in investments is figure out what's important and knowable. If it's unimportant or unknowable you forget about it.](https://sms4smile.com/quotes/warren-buffett/what-you-really-want-to-do-in-investments-is-figure-out-what-s/) [Warren Buffett](https://sms4smile.com/quotes/author/warren-buffett/) > [I don't measure my life by the money I've made. Other people might, but certainly don't.](https://sms4smile.com/quotes/warren-buffett/i-don-t-measure-my-life-by-the-money-i-ve-made-other-people-might-but/) [Warren Buffett](https://sms4smile.com/quotes/author/warren-buffett/) > [I mean the truth is, I've never had it so good in terms of taxes. I am paying the lowest tax rate that I've…](https://sms4smile.com/quotes/warren-buffett/i-mean-the-truth-is-i-ve-never-had-it-so-good-in-terms-of-taxes-i-am/) [Warren Buffett](https://sms4smile.com/quotes/author/warren-buffett/) > [The most important quality for an investor is temperament, not intellect. You need a temperament that neither derives great pleasure from being with the…](https://sms4smile.com/quotes/warren-buffett/the-most-important-quality-for-an-investor-is-temperament-not/) [Warren Buffett](https://sms4smile.com/quotes/author/warren-buffett/) > [Investors, of course, can, by their own behavior make stock ownership highly risky. And many do. Active trading, attempts to "time" market movements, inadequate…](https://sms4smile.com/quotes/warren-buffett/investors-of-course-can-by-their-own-behavior-make-stock-ownership/) [Warren Buffett](https://sms4smile.com/quotes/author/warren-buffett/) [Explore all 984 Warren Buffett quotes ](https://sms4smile.com/quotes/author/warren-buffett/) ## More Active management quotes > [My career in academic research has not been involved with active management of securities. I've tried to understand risk-and-return relationships; also the pricing of…](https://sms4smile.com/quotes/myron-scholes/my-career-in-academic-research-has-not-been-involved-with-active/) [Myron Scholes](https://sms4smile.com/quotes/author/myron-scholes/) > [Active management leads to lots of poor investor behavior. It sends people chasing after whoever has the hot hand at the moment.](https://sms4smile.com/quotes/barry-ritholtz/active-management-leads-to-lots-of-poor-investor-behavior-it-sends/) [Barry Ritholtz](https://sms4smile.com/quotes/author/barry-ritholtz/) > [Get inside information from the president and you will probably lose half of your money. If you get it from the chairman of the…](https://sms4smile.com/quotes/jim-rogers/get-inside-information-from-the-president-and-you-will-probably-lose/) [Jim Rogers](https://sms4smile.com/quotes/author/jim-rogers/) > [Active management is a zero-sum game before cost, and the winners have to win at the expense of the losers.](https://sms4smile.com/quotes/eugene-fama/active-management-is-a-zero-sum-game-before-cost-and-the-winners-have/) [Eugene Fama](https://sms4smile.com/quotes/author/eugene-fama/) > [I can't figure out why anyone invests in active management, so asking me about hedge funds is just an extreme version of the same…](https://sms4smile.com/quotes/eugene-fama/i-can-t-figure-out-why-anyone-invests-in-active-management-so-asking/) [Eugene Fama](https://sms4smile.com/quotes/author/eugene-fama/) > [Index funds have regularly produced rates of return exceeding those of active managers by close to 2 percentage points. Active management as a whole…](https://sms4smile.com/quotes/burton-malkiel/index-funds-have-regularly-produced-rates-of-return-exceeding-those/) [Burton Malkiel](https://sms4smile.com/quotes/author/burton-malkiel/) > [Active management is little more than a gigantic con game.](https://sms4smile.com/quotes/ronald-ross/active-management-is-little-more-than-a-gigantic-con-game/) [Ronald Ross](https://sms4smile.com/quotes/author/ronald-ross/) > [Active management strategies demand uninstitutional behavior from institutions, creating a paradox that few can unravel. Establishing and maintaining an unconventional investment profile requires acceptance…](https://sms4smile.com/quotes/david-f-swensen/active-management-strategies-demand-uninstitutional-behavior-from/) [David F. Swensen](https://sms4smile.com/quotes/author/david-f-swensen/) > [It is very hard, if not impossible," he wrote in his study, "to justify active management for most individual, taxable investors, if their goal…](https://sms4smile.com/quotes/mark-hulbert/it-is-very-hard-if-not-impossible-he-wrote-in-his-study-to-justify/) Mark Hulbert > [Properly measured, the average actively managed dollar must underperform the average passively managed dollar, net of costs. Empirical analyses that appear to refute this…](https://sms4smile.com/quotes/william-forsyth-sharpe/properly-measured-the-average-actively-managed-dollar-must/) William Forsyth Sharpe > [Index investing outperforms active management year after year.](https://sms4smile.com/quotes/jim-rogers/index-investing-outperforms-active-management-year-after-year/) [Jim Rogers](https://sms4smile.com/quotes/author/jim-rogers/) > [Most investors would be better off in an index fund.](https://sms4smile.com/quotes/peter-lynch/most-investors-would-be-better-off-in-an-index-fund/) [Peter Lynch](https://sms4smile.com/quotes/author/peter-lynch/) > [Everybody has a different strategy, but everybody agrees that active management does not beat the market.](https://sms4smile.com/quotes/tony-robbins/everybody-has-a-different-strategy-but-everybody-agrees-that-active/) [Tony Robbins](https://sms4smile.com/quotes/author/tony-robbins/) [Browse all 14 Active management quotes ](https://sms4smile.com/quotes/about/active-management/) ```json { "@context": "https://schema.org", "@graph": [ { "@type": "Quotation", "text": "... the best way to own common stocks is through an index fund.", "creator": { "@type": "Person", "name": "Warren Buffett" }, "isPartOf": { "@id": "https://sms4smile.com/quotes/#website" }, "url": "https://sms4smile.com/quotes/warren-buffett/the-best-way-to-own-common-stocks-is-through-an-index-fund/", "about": { "@type": "Thing", "name": "Active management" }, "@id": "https://sms4smile.com/quotes/warren-buffett/the-best-way-to-own-common-stocks-is-through-an-index-fund/#quotation", "image": { "@type": "ImageObject", "@id": "https://sms4smile.com/quotes/i/685/warren-buffett-183_active-management_the-best-way-to-own-common-stocks-is-thr_2493326.png", "contentUrl": "https://sms4smile.com/quotes/i/685/warren-buffett-183_active-management_the-best-way-to-own-common-stocks-is-thr_2493326.png", "url": "https://sms4smile.com/quotes/i/685/warren-buffett-183_active-management_the-best-way-to-own-common-stocks-is-thr_2493326.png", "width": 1080, "height": 1080, "caption": "“... the best way to own common stocks is through an index fund.” — Warren Buffett", "creditText": "SMS4Smile Quotes", "creator": { "@id": "https://sms4smile.com/quotes/#organization" } } }, { "@type": "BreadcrumbList", "itemListElement": [ { "@type": "ListItem", "position": 1, "name": "Home", "item": "https://sms4smile.com/" }, { "@type": "ListItem", "position": 2, "name": "Quotes", "item": "https://sms4smile.com/quotes/" }, { "@type": "ListItem", "position": 3, "name": "Warren Buffett", "item": "https://sms4smile.com/quotes/author/warren-buffett/" }, { "@type": "ListItem", "position": 4, "name": "... the best way to own...", "item": "https://sms4smile.com/quotes/warren-buffett/the-best-way-to-own-common-stocks-is-through-an-index-fund/" } ], "@id": "https://sms4smile.com/quotes/warren-buffett/the-best-way-to-own-common-stocks-is-through-an-index-fund/#breadcrumb" }, { "@type": "WebSite", "@id": "https://sms4smile.com/quotes/#website", "name": "SMS4Smile Quotes", "url": "https://sms4smile.com/quotes/", "publisher": { "@id": "https://sms4smile.com/quotes/#organization" } }, { "@type": "Organization", "@id": "https://sms4smile.com/quotes/#organization", "name": "SMS4Smile Quotes", "url": "https://sms4smile.com/quotes/", "logo": { "@type": "ImageObject", "url": "https://sms4smile.com/quotes/wp-content/themes/sq/assets/icons/icon-512.png", "width": 512, "height": 512 } } ] } ```