Re: Index funds
[Re: Wolfdog91]
#7405264
11/14/21 10:56 PM
11/14/21 10:56 PM
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Joined: Dec 2006
Posts: 17,379 Coeur d' Alene, Idaho
James
"Minka"
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"Minka"
Joined: Dec 2006
Posts: 17,379
Coeur d' Alene, Idaho
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According to what I've read, most money managers can't beat the relevant index over a long period (more than a few years) of time. This makes investing in an index mutual fund a wise move for most people, especially those getting started in investing.
I haven't followed that advice, however. Somehow striving for mediocrity doesn't enthuse me. I like to invest in funds I think will beat the indexes. Sometimes I'm right, sometimes I'm wrong. But it entertains me to try.
Jim
Forum Infidel since 2001
"And that troll bs is something triggered snowflakes say when they dont like what someone posts." - Boco
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Re: Index funds
[Re: Wolfdog91]
#7405267
11/14/21 10:59 PM
11/14/21 10:59 PM
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Joined: Dec 2006
Posts: 1,580 Duluth, MN
Clark
trapper
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trapper
Joined: Dec 2006
Posts: 1,580
Duluth, MN
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By being average you’ll be above average. Read “A Random Walk Down Wall Street” if you want the full scoop on index funds. So far, I haven’t gone wrong using index funds. Notice James’ second to last sentence above.
Common sense is the collection of prejudices acquired by age eighteen. -Albert Einstein
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Re: Index funds
[Re: Wolfdog91]
#7405283
11/14/21 11:26 PM
11/14/21 11:26 PM
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Joined: Mar 2019
Posts: 1,497 Southern NJ
maintenanceguy
trapper
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trapper
Joined: Mar 2019
Posts: 1,497
Southern NJ
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Almost all my money is in index funds. I keep a little play money on the side that I invest in individual stocks that I trade from time to time. My index funds ALWAYS outperform the money I actively invest.
In fact, managed funds handled by professionals under perform index funds. If you hire a financial manager to manage your investments, they feel a need to show you how much they're doing for you and they often get paid when they trade. so, they do stuff - and bill you when they do. If you just buy index funds and let them sit, you'll make more money and pay less in fees.
A critical part of choosing a fund is the fees. I look for funds with no transaction fee - which is what you pay when you buy it, and "no load" - which means nobody is getting a commission on the sale. There are still going to be other management fees. I look for funds with a "total expense ratio" (that's all the annual fees added together) of less than 1%. I have one fund that has an expense ration of 1.05%.
There are lots of kinds of index funds. Some funds have stocks from the entire market. Some from only the top performers in the market. I like the following:
TRBCX - a "blue chip" fund that includes the top 30 companies in the market like Apple, Boeing, Home Depot. TRSPX - a S&P 500 fund that includes all 500 companies in the S&P 500 - these companies are the big guys that the rest of the market is measured against. NASDX - a "nasdaq 500" fund that includes the 500 top performing companies in the NASDAQ stock exchange.
To find a fund you like, you can use an online "stock screener". Many of these have options to search index funds and not just stocks. You enter your criteria such as 10 year growth rate, transaction fees, etc. and it gives you a list of funds that fit your criteria.
You're a young guy. I would be looking at funds that have long term growth and not get-rich-quick funds. I'm in my 50's and I look for funds that have done well over at least 10 years. Winners usually keep winning so I invest with the funds that have won the most over the long term because I'm in for the long term.
The secret to wealth is to invest and NEVER use any of the investment money. You need a car repair and take $1,000 out of the investment. If you had taken an uber for a couple of weeks instead and left the 1,000 in your investment, making 10% interest (very possible), for 40 years, that $1,000 would turn into over $53,000 dollars. That car repair cost you $53,000! NEVER Take money out of your investments.
-Ryan
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Re: Index funds
[Re: Wolfdog91]
#7405284
11/14/21 11:26 PM
11/14/21 11:26 PM
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Joined: May 2010
Posts: 2,686 Alaska
drasselt
trapper
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trapper
Joined: May 2010
Posts: 2,686
Alaska
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Smart move. Start investing now and soon you will be far ahead of most of your peers.
Last edited by drasselt; 11/14/21 11:26 PM.
you can vote your way into socialism, but you will have to shoot your way out.
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Re: Index funds
[Re: Wolfdog91]
#7405315
11/15/21 12:08 AM
11/15/21 12:08 AM
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Joined: Jan 2008
Posts: 9,249 Alaska and Washington State
waggler
trapper
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trapper
Joined: Jan 2008
Posts: 9,249
Alaska and Washington State
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Go on Amazon and get a short and inexpensive book titled; " Nobody Knows Anything: Investing Basics Learn to Ignore the Experts, the Gurus and other Fools". Reading this book has the potential to give you more wisdom than 90% of financial advisors out there have.
Last edited by waggler; 11/15/21 12:10 AM.
"My life is better than your vacation"
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Re: Index funds
[Re: Blaine County]
#7405475
11/15/21 08:19 AM
11/15/21 08:19 AM
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Joined: Dec 2006
Posts: 17,379 Coeur d' Alene, Idaho
James
"Minka"
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"Minka"
Joined: Dec 2006
Posts: 17,379
Coeur d' Alene, Idaho
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I suggest target funds for most folks. You pick based on approximately when you will retire. They capture all of the benefits mentioned above but give you automatic diversification and balance (and re-balance for you). And what happens when you hit the target retirement date...and realize you may have another two or three decades to invest and maybe live off the money. Jim
Forum Infidel since 2001
"And that troll bs is something triggered snowflakes say when they dont like what someone posts." - Boco
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Re: Index funds
[Re: Wolfdog91]
#7405494
11/15/21 08:48 AM
11/15/21 08:48 AM
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Joined: Dec 2006
Posts: 17,379 Coeur d' Alene, Idaho
James
"Minka"
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"Minka"
Joined: Dec 2006
Posts: 17,379
Coeur d' Alene, Idaho
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For a while when having heart issues, I turned over our monetary assets to a fund manager who charged one percent fee per year. After one year, he proudly announced he'd achieved a 6.7 gain for us. That was in a year when the S&P index returned 19 percent. To top it off, he had our money in mutual funds...the wrong funds. So we were paying the regular mutual fund fees, plus one percent to the money manager. Not one percent of the gain, but one percent of the assets.
I had our money sent to Fidelity, set up a brokerage account, and invested in four- and five-star (Morningstar ratings) mutual funds. Have done much better on my own. I once got burned completely when I bought two individual tech stocks, and lost the whole investment. So I stick to mutual funds now. I don't have the time or interest in being a stock picker. I'm a picker of stock pickers. I do twice a year reviews to sell the stinker funds and maybe buy a replacement. If a fund sinks to three stars, it's got to offer something pretty attractive for me to keep it.
I've invested in growth and value funds in three categories: large, medium, and small companies. Plus a good international fund. To me, that's a good core investment. I also have sector funds in tech and health care, but I more consider this money for playing around.
Jim
Forum Infidel since 2001
"And that troll bs is something triggered snowflakes say when they dont like what someone posts." - Boco
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Re: Index funds
[Re: Wolfdog91]
#7405561
11/15/21 10:05 AM
11/15/21 10:05 AM
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Joined: Dec 2006
Posts: 17,379 Coeur d' Alene, Idaho
James
"Minka"
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"Minka"
Joined: Dec 2006
Posts: 17,379
Coeur d' Alene, Idaho
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I like the research tools at Fidelity. Here is the page that distills the prospectus for one of my favorite funds, Fidelity Blue Chip Growth Fund. https://fundresearch.fidelity.com/mutual-funds/summary/316389303?type=sq-NavBarThis page offers a lot of useful info for investors. The top left section reveals that the fund is Morningstar-rated five stars, that returns have been high, expenses about average, and risk a little higher than average. Moving down on the left under "Details" we find that the fund's Morningstar category is large growth, the date of inception of the fund, its size, and so on. The most important info here is probably the gross expense ratio, which in the case of Blue Chip Growth is .79%--which is lower that most large company growth funds. In the middle top, there's a graph that shows the BCG fund's performance, as compared to two relevant indices, over the last ten year period. You can see that $10,000 invested ten years ago would now be worth $72,000 in the BCG fund, $59,000 invested in the Russell 1000 Growth index, and only $47,600 in an index of growth mutual funds. So BCG fund is a rare creature: a mutual fund that has beaten the index for at least ten years. Seems simple--we should invest in this one, right? Not so fast. Just because the fund has outperformed over the last ten years doesn't mean it will continue to outperform over the next ten. The fund manager, who picked the funds investments for the whole ten year period, may leave next year, leaving the fund in the hands of an untested newbie. Lots of stuff can happen. Maybe, instead of stock-picking acumen, the manager has just been lucky, and his luck is about to run out. At this point if you buy, you're gambling. But it's an educated gamble. This is a simplified explanation of how I pick mutual funds. Jim
Forum Infidel since 2001
"And that troll bs is something triggered snowflakes say when they dont like what someone posts." - Boco
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Re: Index funds
[Re: Wolfdog91]
#7405567
11/15/21 10:07 AM
11/15/21 10:07 AM
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Joined: Aug 2008
Posts: 16,318 ny
upstateNY
trapper
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trapper
Joined: Aug 2008
Posts: 16,318
ny
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Anyone invest in them ? What's your experience? The Ole Man told me years ago,,"Invest in land,,its the only thing they cant make more of." Take that for what its worth to ya Woolfy.
the wheels of the gods turn very slowly
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