I didn't think I would get such a backlash.
When you guys reference index funds, what funds do you recommend? Vanguard is not the Only company to offer them. That's as open ended as saying to invest in stocks.
Also just curious to hear your ideas on why investing in natural gas is such a terrible idea.
Investing in natural gas is not a terrible idea. Unless it is. If you think you can time the market on a commodity, you're not alone. But on the whole, very few people beat the market repeatedly, and most who try to beat it end up losing or underperforming.
The philosophy behind an index fund is that you don't try to beat the market but try to match it and incur the lowest number of fees possible in doing it.
Don't think that the Vanguard Total Stock Market index fund is a low-risk investment; it's not. You're buying into the whole stock market, which can be quite volatile. But it's much, much more steady than any single investment. It's certainly less stable than Total Bond Market or a TIPS fund. Or a bank account, CD, or federal treasury note (ie. savings bond). Volatility typically translates into higher returns, but it can also turn out higher losses. Determining your level of risk tolerance is by far the most important decision you will make when investing. Learn what carries risks, your long-term and short-term goals, and then decide.
Vanguard and other brokerages have different philosphies, but Vanguard was probably the first to come forth and endorse the idea that the best way to maximize your investments was to minimize expenses. Their funds tend to have little turnover in the their stocks to minimize transaction fees, they don't try to pick winners and losers, and instead invest broadly in various asset classes that you can choose to invest in. Hence, "Total Stock Market," "Total Bond Market," or "Total International Market." Fidelity is another brokerage company who has some lower expense funds, including their Spartan funds, though they also have more actively managed funds.
To use Vanguard as an example, their Total Stock Market Index fund as an expense ratio of 0.18% annually. That compares to the market average of 1.21%. If you invest over $10,000 in that fund, its expense ratio drops to 0.06% Keep in mind that you're paying the "average" investment firm nearly 7-fold what Vanguard charges to manage your fund, and you'll see why they have a following.
If you want a very active fund manager always out to choose the biggest winners in the market, Vanguard is not your investment firm. If you want people you can meet with face-to-face on a regular basis, they're probably not your brokerage. Just know what you want.