Fund picks and pans stocks

enoriverbend says:

There’s a lot of them. Why don’t we narrow it down to just best-of-breed, so to speak?

The two clear-cut leaders in s&p 500 index mutual funds (not ETFs) are Fidelity and Vanguard. There is no difference in performance in 500 index funds other than cost (how much they charge you to buy and for maintaining the fund). Both of these two (VFINX from Vanguard and FSMKX from Fidelity) and are rock-bottom cheap, since they are both no-load which means you do not pay a purchase fee. So the only cost is a tiny little 0.10% to 0.18% yearly expense fee.

Vanguard was the cheapest and best choice for many years, but Fidelity has woken up and cut the costs at their 500 index fund to below that of Vanguard. Either is an excellent choice, and you can contact them directly to invest — http://www.vanguard.com and http://www.fidelity.com.

Vanguard was in fact the inventor of the 500 index fund so if you can’t pick for any other reason, go with Vanguard to reward them for a really good idea. Also, Vanguard 500 Index has a $3000 minimum and Fidelity Spartan 500 a $10000 minimum.

For ETFs, the two leaders are #1 SPDR (S&P Depository Receipts) and #2 IVV (iShares S&P 500). ETFs trade on the market like a stock, so you would have to set up an account with a broker in order to invest in them. But then the cost to acquire them is approximately the cost of a trade with your broker — so, doing it through a discount online broker like E-trade or TD Ameritrade would be $7-$10 or so for one trade. One advantage of ETFs is that there is no firm minimum, although of course the fee starts looking larger in proportional terms the smaller your investment is.

If that’s all too much information: call Vanguard or visit their web site and put your money into their VFINX Vanguard 500 fund.

muncie birder says:

There are so many it is hard to keep track of them. On the exchange traded side of the ledger there are 2 that are directly tied to the S&P 500 index plus many subjects and deviants. SPY is the most widely traded with an expense ratio of 0.10%. There will also be a brokerage fee to buy and sell. Scottrade charges $7.00 each. Another is IVV with an expense ratio of 0.09%. There is however one that contains the stocks of the S&P 500 but not in the ratio of the index. Instead it is equal weighted. It is RSP. It has the distinction of outperforming the index by about 1.5%.

Here is a link to all current etfs. You can paruse them all.

http://www.etfconnect.com/select/rank/default.asp?fType=2&oType=5

As for the mutual fund selections, I think every major fund family has one with expense ratios that are competitive with the ETFs. ETSPX has an expense ratio of 0.09%. FSMKX has an expense ratio of 0.10%. SWPEX has an expense ratio of 0.20% but a minimum investment of only $1000. VFINX has an expense ratio of 0.18%. There are two bushel baskets more out there also. If you choose a mutual fund there is no brokerage fee. Just go to the mutual fund site, down load the prospectus and application form. Read the prospectus, fill out the application, make out a check, address and stamp an envelop, enclose the application and check and drop it in the mail and you are in business. If you choose the ETF route, you need to open an account with a brokerage firm. All the on line brokers have web sites where it will take you about 20 minutes to accomplish that. Send them a check and the get on the internet and enter your order. 20 seconds later you are the proud owner of your index fund.