Z06Biker wrote:For those without the time to monitor their stocks on a regular basis, it seems like simply tracking the Dow or S&P indices would provide the best returns, at least in current market conditions? They're grown about 14-15% YTD, which even beat out Berkshire Hathaway. Then again, I also hear tremendous things about some of the aforementioned Vanguard funds.
Depending on which Vanguard fund you choose, it may very well do just that. ETFs are designed to track indices or markets. You can get an ETF that tracks the Dow, the NASDAQ, the S&P...whatever you want.VTI
tracks the total stock market. It's about as broad a fund as you can get. It also has a 0.05% expense ratio, which is pretty awesome.
The real trick is called dollar-cost averaging
. Unless you're a huge company using high-frequency trading to eek every last bit of profit out of every penny, you're already on the losing side of things.
DCA allows you to smooth things out and optimize your investments. You invest a fixed amount on a fixed periodic basis - say, $200 every month - into a fund. When the fund is up, you purchase fewer shares. When it's down, you acquire more. The potential returns are lower, but so is the risk. If you're in for the long haul, it's a good way to invest.
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