for most, An s&P 500 fund will do; seek index funds with low fees [Virginian – Pilot]
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Question: I'm a beginning investor and have heard that when it comes to mutual funds, I shouldn't bother with anything but a low- cost index fund. Is that right?
- V.E.,
A: For most people, a broad-market index fund is perfect. An S&P 500 fund will have you invested in 500 of America's biggest companies. (Many of them have substantial overseas operations, too, giving you valuable international exposure.) You can go even broader with something like Vanguard's Total Stock Market Index, which also includes smaller and medium-size companies.
Seek index funds with low fees, such as ones from Vanguard, Fidelity, Schwab and others. They often charge less than 0.25 percent annually.
If you want to try to beat the market, you might put some of your money into a few top-notch managed mutual funds, or invest in a few carefully chosen individual stocks. Index funds, though, are the easiest and can get you close to the market's return, which is great for those without the time or expertise to study funds and stocks.
Fool's school
To build yourself a more comfortable tomorrow, you should be doing certain things today. Here are some smart retirement moves:
(1) Save more. For 2013, the annual contribution limit for 401(k), 403(b) and 457 plans is
(2) Consume less. Cut out just
(3) Rein in debt. Your assets need to grow faster than your liabilities. Eliminating high-interest debt should be a top priority.
(4) Turn hobbies into incomes. Is there some activity you enjoy that can generate extra money for you now or in retirement? Earning more now (perhaps by teaching, writing or even working a few hours at
(5) Run the numbers. You might be eager to retire, but can you afford to? Learn what you'll need to retire by consulting a pro or using online calculators. Visit fool.com/calcs/calculators.htm or aarp.org/work/retirement-planning, for example.
Foolish trivia
I trace my roots back to a
Answer to last week's question:
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