Has anybody here invested in index funds? Good experience, bad? What kind of initial investment are we talking about here?

Thanks.

1/17/2007 1:34:14 AM

Look in the stock market thread

1/17/2007 1:51:42 AM

as long as you invest in a low cost one and hold it for a long time, its a pretty good investment, historically.

1/17/2007 6:35:33 AM

step 1: choose index funds that have a low expense ratio, like a 10th of a percent.
step 2: put money into it
step 3: wait a few decades
step 4: .....
step 5: profit

and in all seriousness, if you do this, you'll get the best gains you're going to get over the long haul.

1/17/2007 8:02:57 AM

^/thread.

1/17/2007 8:26:44 AM

i'd like to add that you can go with actually buying into the regular fund, or you can buy them as ETFs. just open up an account with the online broker of your choice (Scottrade, E-trade, etc)...you don't need anything other than that (and certainly don't set them up in an annuity or anything). You might want to put them in an IRA if you don't already have one set up.

1/17/2007 8:30:57 AM

Assuming you know what index funds are, you can assume why they would be a good choice for low-risk investors.

Index funds are tiny portions of many different stocks. You essentially get rid of all your unsystematic risk, leaving you with only the risk associated with a total market decline. You're not going to outperform the market, but then again, you most likely won't underpeform either.

Check out the Motley Fool article

http://www.fool.com/school/13steps/13steps04.htm?ref=SchAg

Some index funds will let you buy in for as little as $500.

1/17/2007 10:17:06 AM

or you can by ETFs that track an index whose only minimum is the price of one share plus your broker fees.

Quote :

"You're not going to outperform the market"

agreed, this is basically the universal rule of investing. You might beat it here and there, and maybe even a few years running, but over the long haul, the market will beat you.

1/17/2007 10:21:48 AM

Quote :

"you most likely won't underpeform either."

Just a bit of info for you, you not only are likely to underperform the market, you are virtually guaranteed to. That is because of the expense ratio.

Even though it is very small, it still represents underperformance. I still recommend using the strategy though.

1/17/2007 10:51:33 AM

Make sure you understand the difference between an index fund and an ETF. If this is something you plan to add a couple of bucks to each month, you're going to want an index fund (like the Vanguard 500) or a mutual fund. If you're looking to make an actual investment (i.e. buy some shares and hold them for some period), an ETF is probably more appropriate. You do not want to be buying a couple ETF shares each month.

1/17/2007 11:09:15 AM

^ very true

1/17/2007 11:17:56 AM

Quote :

"Index funds are tiny portions of many different stocks."

isnt that like a mutual fund or something? in bus 225, huggard said a mutual fund was a portfolio of a bunch of different stocks

V thanks

1/17/2007 11:40:13 AM

It's a type of mutual fund.

1/17/2007 11:47:42 AM

john bogle has a number of good investing books that are easy reads for non-investors. he invented the index fund, and clearly explains how and why they are good investments.

1/17/2007 9:00:27 PM