Glad to hear my real-life friends Pete, SD, and Warren Buffet (known EMAW) tout the virtues of Index funds. No surprise they're
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This post is pretty DNR, so I'm going to bold the highlights.
For those of you new to investing--
I'm a big proponent of using Charles Schwab. Their website gives you all the info you'll ever need to know, but more importantly, their customer service is outstanding. Hold times are negligible, all customer service reps are happy, all call centers are based in Phoenix or Denver, and other banking products are free/outstanding. Schwab really made a young WonderMeal feel comfortable with investing and answered all of my investor n00b questions, which is why I think they're great for new investors. (Note: I don't pay them for investing advice, since I'm just trying to match the market. I just ask them questions when I have old 401ks/403bs to roll over, etc.) I can't speak for other brokerage firms and I'm sure some others are great, but I've been with Schwab for almost a decade and don't see a need to see anyone else.
my 401 is in a vanguard target fund, vfifx. it's done really well for me, especially over the last year (13.44%).
That return is great, and 'grats, but I think the S&P500 grew by 16% in 2012. The expense ratio of the index fund SD and his Omaha friend use is .13% lower than VFIFX.
However, the fact that target date funds become 'safer' near your retirement age makes the slightly higher expense ratio justifiable, and could be a good option for our real life friend KSC.For investor n00bs who have been swayed by my Schwab sales pitch,
I have had lots of success with SWPPX (tracks S&P 500, expense ratio of .08%) and SNFXX (tracks S&P plus the next-largest 500 companies, expense ratio of .29%). Almost every time I have tried to get cute and find mutual funds/stocks/ETFs to outperform these two guys, I have lost.
See you in a few years down at Del Boca Vista (ocean view), SD, Pete, and KSC!