Last Updated Mar 16, 2010 9:50 AM EDT In The Elements of Investing, co-author Burton Malkiel, the Princeton University economics professor who is considered the philosophical father of index funds, argues that you should use these funds to invest in U.S. and international stocks, as well as bonds. In this excerpt, he explains why — and picks eight funds for you to consider. Great coaches all agree with a simple summary of how to succeed in athletics: Plan your play and play your plan. That’s why you’ll want to develop a clear and simple financial plan and stay the course. Low-cost index funds offer a remarkably simple plan for investing. They eliminate the anxiety and expense of trying to predict which individual stocks, bonds, or mutual funds will beat the market by buying and holding all the securities in the market as a whole. The financial media are quick to celebrate managers who have recently beaten the market as investment geniuses. But over 10-year … [Read more...] about Mutual Fund Picks: Best Stock and Bond Index Funds
Vanguard total stock market index fund
Vanguard switching to lower-cost fund benchmarks
BOSTON Vanguard Group is trying to bolster its appeal to cost-conscious investors by reducing a key expense of investing in low-cost index mutual funds: Fees paid to firms that license benchmarks covering segments of the stock market that the funds track. The nation's largest fund company said on Tuesday that it has negotiated lower-cost index licensing deals that will result in 22 of its index funds switching to new benchmarks, and adjusting the stocks they invest in accordingly. The move is expected to eventually lead to fee reductions for investors in Vanguard funds holding more than half a trillion dollars, or more than a quarter of the $1.95 trillion that the company manages in U.S. mutual funds and exchange-traded funds. ETFs: Schwab or Vanguard?John Bogle's 10 rules of investingDon't let high 401(k) fees bleed you dry The new licensing deals "will enable us to deliver significant value to our index fund and ETF shareholders and lower expense ratios over time," said Gus Sauter, … [Read more...] about Vanguard switching to lower-cost fund benchmarks
Five lessons from the stock market recovery
On Feb. 3, headlines read "Dow tumbles over 300 points." And with the Dow down more than 1,200 points for the year, many predicted a major market meltdown. But by last Friday, Feb. 14, the market was in a more loving mood and total U.S. stocks fully recovered. $10,000 invested in the Vanguard Total Stock Market Index ETF (VTI) was down $2.00, or 0.02 percent, with the broadest index, the Wilshire 5000 (full cap) up 0.03 percent for the year. The chart below shows the path to breakeven followed by some key investing lessons. 1. Put the crystal ball back in the closet. Many predicted stocks to continue to "plunge" in response to Fed stimulus being tapered or for a host of other reasons. Though to my knowledge no one predicted such a rapid recovery, there sure seemed to be a whole lot of people who seemed confident they could explain it. 2. Have some perspective. Sure the drop in stocks was painful, but words like "plunge" and "meltdown" make investors lose perspective. … [Read more...] about Five lessons from the stock market recovery
This record-setting stock market sure is boring
NEW YORK - This year's run to a record for the stock market has been one of the calmest in decades. Just don't get too comfortable. Only twice this year have investors had to deal with a 1 percent drop for the S&P 500 stock index in a day. That's far fewer than typical. The last time stocks sailed through such an uneventful first seven months was when a group of burglars was arrested for breaking into the Watergate complex in 1972. Broaden the scope to include when the S&P 500 fell or rose by 1 percent in a day, and this could be the least volatile year for stocks since 1964, if the current pace holds. But as central banks start to wean markets off the stimulus they've been injecting into the global economy for years, many money managers say they're preparing for a bumpier ride ahead. For now, markets have been so calm that the biggest loss for the S&P 500 last week was just 0.2 percent. Compare that to the whiplash investors felt during the summer of 2011, when the S&P … [Read more...] about This record-setting stock market sure is boring
Are gun stocks helping fund your retirement?
Millions of Americans own guns and may not even realize it. That is, they own stakes in the companies that make guns. That's because dozens of widely owned funds in 401(k) plans and other retirement and investment accounts own stock in publicly traded firearms manufacturers, including the makers of assault-style weapons often used in mass-shooting incidents. The shares appear in both actively managed funds and passive index investments. For instance, large holders of Sturm, Ruger & Co. (RGR) include the Growth Fund of America and Vanguard Small-Cap Index Fund, Morningstar data shows. American Outdoor Brands (AOBC), owner of the Smith & Wesson brand, are held by the Vanguard Strategic Equity and Invesco Small-Cap Value funds. And Vista Outdoor (VSTO) appears among the holdings of the Fidelity Value and Vanguard Total Stock Market Index funds. About 35 percent of US stock funds include investments in a maker or retailer of guns and ammunition, which adds up to more than $17 … [Read more...] about Are gun stocks helping fund your retirement?