for most, An s&P 500 fund will do; seek index funds with low fees [Virginian - Pilot] - Insurance News | InsuranceNewsNet

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July 23, 2013 Newswires
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for most, An s&P 500 fund will do; seek index funds with low fees [Virginian – Pilot]

THE MOTLEY FOOL YOUR INVESTMENTS
By THE MOTLEY FOOL YOUR INVESTMENTS
Proquest LLC

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., Salisbury, Md.

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 $17,500 (plus an additional $5,500 "catch-up" contribution for those 50 or older), and IRAs now can absorb $5,500 per year ($6,500 for those 50 or older). Increasing what you contribute each year by $1,000 is just $83 per month but can add up to nearly $50,000 over 20 years and $125,000 over 30 years (assuming an 8 percent annual return).

(2) Consume less. Cut out just $30 per month ($1 per day), and add that money to your savings. Growing at just 7 percent, it would top $30,000 in 30 years.

(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 Home Depot) could increase your savings and move up your retirement date. Having a part-time job in retirement also offers benefits.

(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 Lakewood, N.J., hotel business in 1946, which was followed by a controlling interest in a chain of 102 movie theaters. Today, based in Manhattan, I'm an insurance giant with other businesses, raking in more than $14 billion annually and sporting a single-letter ticker symbol on the stock exchange. I have five principal subsidiaries: CNA Financial Corp., Diamond Offshore Drilling, HighMount Exploration and Production, Boardwalk Pipeline Partners, and a hotel-and-resort business that bears my name. Focusing on value investing, I have trounced the S&P 500's returns over the past 50 years. Who am I?

Answer to last week's question: AFC Enterprises

Join in: If you have a question for The Fool, visit fool.com.

Copyright:  (c) 2013 ProQuest Information and Learning Company; All Rights Reserved.
Wordcount:  538

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