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hey guys, what's a good low-cost index fund for an intern like myself to begin investing in? What are some good Roth IRAs? Thanks!
index fund
- Thread starter HolyMoly
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Vanguard is the place to start. If you are investing o
in index funds the manager is not very important as it is essentially run by a computer. The Roth max is $5000 for both this year and 2010. There is an additional $1000 catch up contribution for those over 50. Vanguard fund minimums are $3000 for almost every fund. The star fund starts at $1000. A target date fund with something close to your age in bonds is a great starting point. Go to bogleheads.org and read the wikis to learn more.
in index funds the manager is not very important as it is essentially run by a computer. The Roth max is $5000 for both this year and 2010. There is an additional $1000 catch up contribution for those over 50. Vanguard fund minimums are $3000 for almost every fund. The star fund starts at $1000. A target date fund with something close to your age in bonds is a great starting point. Go to bogleheads.org and read the wikis to learn more.
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Vanguard is good for low cost index funds, and they have among the lowest expense ratios I've come across. However, most of their funds have a minimum of $3,000 to begin. If you want something lower...
T. Rowe Price also has index funds with low expense ratios, and if you sign up for automatic debits from a bank account, you can begin with $50.
Schwab's expense ratios are crazy low, in some cases, lower than even Vanguard's. You can start with $100 if you sign up for automatic debit from a bank account. Both of them offer Roth IRA's.
Good luck.
T. Rowe Price also has index funds with low expense ratios, and if you sign up for automatic debits from a bank account, you can begin with $50.
Schwab's expense ratios are crazy low, in some cases, lower than even Vanguard's. You can start with $100 if you sign up for automatic debit from a bank account. Both of them offer Roth IRA's.
Good luck.
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Fidelity Spartan Index funds have even lower expenses than Vanguard. However, they normally require a $10,000 minimum starting balance.
A way around this is to participate in an automatic withdrawal program. If you opened up a Roth IRA (for example) with Fidelity, you only need $500 to start with $100 withdrawn directly from your bank account each month.
A way around this is to participate in an automatic withdrawal program. If you opened up a Roth IRA (for example) with Fidelity, you only need $500 to start with $100 withdrawn directly from your bank account each month.
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I've recently gotten into index investing, but as a Schwab customer, their index funds are pretty limited. Granted they have non-Schwab funds available as well that do not charge loads or transaction fees. Vanguard definitely has a bigger selection, but as someone mentioned already, many have a $3,000 minimum per fund. Unless you're investing in a target-date fund, you will need at least $30,000 to truly index invest with appropriate diversification.
I would go straight money market fund for a while, till all the dust settles (2012ish??)
The rally (dead cat bounce) is pretty much over. If ya got in in March, great...if you didn't....again the free money is over.
The days of buy and hold and just letting "growth" mutual funds ride the wave are dead. If one were to invest in a most mutual funds 5-6 years ago, would they be better off as compared to investing in Bonds or CD's? (no, they would not).
JMO....safe fixed income funds are the only thing I would touch at these levels.
The fed funds rate is at 0% (that means the govt lends banks money for 0% interest)...(hello....it has no way to go but UP!)
- there is stimulus out the wazoo, being pumped. This is all temporary, sure it might have a magnitude larger than a 5hr energy drink, but its no more than a its a shot in the arm of B-12 for the pernicious anemia pt at best. This is not a "new bull market"....
Roth is 5k per year, fwiw. http://www.rothira.com/ However, once your start making mid 100's, you wont even be eligble anymore. So I would pour it in now, while you are.
http://www.moneychimp.com/articles/rothira/contribution_limits.htm
just a ramble. But the name of the game is now investing to MAKE money, its investing to RETAIN capital....
Do you own due dilligence.............
SPY: Index Fund of the SP500
QQQQ: Index fund of the Nasdaq 100
DIA: Index fund of the Dow Jones Industrials
FXI: Hang Seng/FX25 China Index Fund
Why would someone pay even a 0.0000001% expense ratio, when they can simply purchase direct index funds? (it's beyond me)
Differant strokes for differant folks, to each its own. No one cares about your money like YOU do.
The rally (dead cat bounce) is pretty much over. If ya got in in March, great...if you didn't....again the free money is over.
The days of buy and hold and just letting "growth" mutual funds ride the wave are dead. If one were to invest in a most mutual funds 5-6 years ago, would they be better off as compared to investing in Bonds or CD's? (no, they would not).
JMO....safe fixed income funds are the only thing I would touch at these levels.
The fed funds rate is at 0% (that means the govt lends banks money for 0% interest)...(hello....it has no way to go but UP!)
- there is stimulus out the wazoo, being pumped. This is all temporary, sure it might have a magnitude larger than a 5hr energy drink, but its no more than a its a shot in the arm of B-12 for the pernicious anemia pt at best. This is not a "new bull market"....
Roth is 5k per year, fwiw. http://www.rothira.com/ However, once your start making mid 100's, you wont even be eligble anymore. So I would pour it in now, while you are.
http://www.moneychimp.com/articles/rothira/contribution_limits.htm
just a ramble. But the name of the game is now investing to MAKE money, its investing to RETAIN capital....
Do you own due dilligence.............
SPY: Index Fund of the SP500
QQQQ: Index fund of the Nasdaq 100
DIA: Index fund of the Dow Jones Industrials
FXI: Hang Seng/FX25 China Index Fund
Why would someone pay even a 0.0000001% expense ratio, when they can simply purchase direct index funds? (it's beyond me)
Differant strokes for differant folks, to each its own. No one cares about your money like YOU do.
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To my knowledge not a single index fund exists that doesn't charge. Please let me know which funds do not have expense ratios or management fees.
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For the absolute lowest expense ratios for an index plan you would need access to the TSP plans that federal employees can access. The C fund which matches the S&P 500 index has an expense ratio of 0.019%. To clarify that is 1.9 basis points where 1 basis point is 1/100th of a percent.
Southerndoc,
I stand corrected. You are correct.
There are no funds at all which have Zero for the expenses and/or fees.
The expense ratio on SPY is 0.09% (no managment fee)
-Also as the other poster had mentioned is that C fund, which is a direct representation of the SP500 (synonomous w/ SPY)
SPY is an ETF (exchange traded fund)
http://finance.yahoo.com/q/pr?s=SPY
Although the expense is not "zero", it pretty much is when compared to any mutual fund.
My point, is that there are several "mutual funds" out there, that even when reading the prospectus one can see are "designed to track the sp500" yet they might have a 2% expense fee and who knows maybe even a management fee as well. Yet if you look back year after year, the performance is identicle to lets say SPY.
The only part i am hoping or trying to share is that IF a mutual fund can be duplicated by a direct correlating ETF, such as the given example, then there is likely a wasted fee in having a "mutual fund". When all the mutual fund is is the direct investing into that same ETF.
Reading the prospectus might say "looks for opportunity in emerging sectors of blah blah blah, as its all subjective writing". However if you look at the allocation and its 100% lets say QQQQ (when then its a Nasdaq 100 fund, plain and simple)
If the mutual fund says they invest 40% in the SP500, 20% in the Nasdaq, 20% in Long term Bonds and 20% in Emerging Markets, and the Mutual fund charges lets say 1%.
Then there is ETFS for all of those, and one puts that same % correlation into those etf's, they only pay 0.09%.
Again, long winded, but there are MANY mutual funds, where the investor can save a nice little % by simply allocating that same money into an etf with a much lower expense ratio. It does however, require more education and HW, however it is also more control and saves money. Hope that's as clear as mud. It's not a knock on mutual funds. It's a consumer/investment awareness issue.
And/Or, as bobblehead points out w/ the C fund, being a direct correlation to the SP500, and that low on an "expense ratio"...
, there is a mutual fund (or probably about 100 of them) out there right now, that is the ezact same thing yet charges an expense ratio AND a management fee. Since the C fund is not available in a Roth (only in TSP), i wanted to bring to light a seperate example.
I stand corrected. You are correct.
There are no funds at all which have Zero for the expenses and/or fees.
The expense ratio on SPY is 0.09% (no managment fee)
-Also as the other poster had mentioned is that C fund, which is a direct representation of the SP500 (synonomous w/ SPY)
SPY is an ETF (exchange traded fund)
http://finance.yahoo.com/q/pr?s=SPY
Although the expense is not "zero", it pretty much is when compared to any mutual fund.
My point, is that there are several "mutual funds" out there, that even when reading the prospectus one can see are "designed to track the sp500" yet they might have a 2% expense fee and who knows maybe even a management fee as well. Yet if you look back year after year, the performance is identicle to lets say SPY.
The only part i am hoping or trying to share is that IF a mutual fund can be duplicated by a direct correlating ETF, such as the given example, then there is likely a wasted fee in having a "mutual fund". When all the mutual fund is is the direct investing into that same ETF.
Reading the prospectus might say "looks for opportunity in emerging sectors of blah blah blah, as its all subjective writing". However if you look at the allocation and its 100% lets say QQQQ (when then its a Nasdaq 100 fund, plain and simple)
If the mutual fund says they invest 40% in the SP500, 20% in the Nasdaq, 20% in Long term Bonds and 20% in Emerging Markets, and the Mutual fund charges lets say 1%.
Then there is ETFS for all of those, and one puts that same % correlation into those etf's, they only pay 0.09%.
Again, long winded, but there are MANY mutual funds, where the investor can save a nice little % by simply allocating that same money into an etf with a much lower expense ratio. It does however, require more education and HW, however it is also more control and saves money. Hope that's as clear as mud. It's not a knock on mutual funds. It's a consumer/investment awareness issue.
And/Or, as bobblehead points out w/ the C fund, being a direct correlation to the SP500, and that low on an "expense ratio"...
, there is a mutual fund (or probably about 100 of them) out there right now, that is the ezact same thing yet charges an expense ratio AND a management fee. Since the C fund is not available in a Roth (only in TSP), i wanted to bring to light a seperate example.
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If you're concerned about minimums simply purchase an index etf(exchange traded fund) using a discount broker -Interactive Brokers would be my choice, trades at just $1.00).
Vanguard also offers etf's.
Vanguard also offers etf's.
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ETFs have transaction costs (you pay to buy or sell) so if you are adding to your holdings periodically, you will pay each time. A vanguard fund or other low-cost fund will let you buy and sell free. If your holdings and transactions are small, the transaction costs will add up to a bigger difference than the mgmt fees.
2 part answer.
Any one who has invested in an S&P500 or total stock market index 10 years ago would be still in red. So good luck with Index funds. I generally like no load Balanced fund/moderate allocation/global balanced fund/global allocation funds. Any fund manager in this category with +ve return in last 3 years has done a great job. If I were you I would focus on that one.
If you really like Vanguard then Vanguard Wellesly or Wellington are good too.
Vanguard Brokerage service sucks. Try to transfer out your IRA or Roth or try to convert IRA to Roth or rollover etc then you will know what I am talking about. Vanguard is pretty bad for low assets investors as they have tons of small fees.
I think you will be better serve as some good discount brokerages where you can buy which ever product you want.
If you really want index fund then don't forget ETFs where you can get in or out as well where as in open ended mutual funds they wine a lot and label you as market timer.
Any one who has invested in an S&P500 or total stock market index 10 years ago would be still in red. So good luck with Index funds. I generally like no load Balanced fund/moderate allocation/global balanced fund/global allocation funds. Any fund manager in this category with +ve return in last 3 years has done a great job. If I were you I would focus on that one.
If you really like Vanguard then Vanguard Wellesly or Wellington are good too.
Vanguard Brokerage service sucks. Try to transfer out your IRA or Roth or try to convert IRA to Roth or rollover etc then you will know what I am talking about. Vanguard is pretty bad for low assets investors as they have tons of small fees.
I think you will be better serve as some good discount brokerages where you can buy which ever product you want.
If you really want index fund then don't forget ETFs where you can get in or out as well where as in open ended mutual funds they wine a lot and label you as market timer.
