One of the key questions of investing is, naturally,what exactly to invest in.
You know it should be a mutual fund, right?
And youve heard that low cost and diverse are good.
But what does that actually look like?
(It does not considercash as an investing asset.)
More active investors with different goals might consider something else.
But for many of us, the hands-off approach works.
The differences between total index funds at different brokers, should there be any, are likely negligible.
For Bogleheads, the simplicity is the key.
Funds like these are the closest thing to truly passive stock investing, notes the Motley Fool.
Another key: They are inexpensive to hold, both in terms of fees and taxes.
Once youve picked your three total funds, you decide your asset allocation from there.
The problem is that no one knows in advance which will turn out to be the best road.
Its not as comprehensive, but its the next best thing.
Very diversified with over 15,000 worldwide securities (lower risk).
Very low
expense ratios.
- Very low (hidden)
turnover
costs.
- The many
Advantages of Simplicity.
- Fewer but larger funds results in earlier eligibility for low-cost
Admiral shares.
- No
adviser risk.
tracking error
to cause abandonment of the strategy.
front-running
that reduces sub-index returns.
- Automatic
rebalancing
within each fund.
Never under-performs the market.
Easy to maintain for the owner, spouse, caregivers and heirs.
More free time.
Obviously, this isnt theonlyway to invest, just one option with a big support internet.
To circle back around to an important point, these are otherwise known as core holdings.
But you want to double-check youre contributing consistently to these core funds.
Sometimes simplicity is all you need.
