Bogle was known for a lot of things. Nellie, you might be able to offer some guidance based on your upcoming rating of online brokers
Without, of course, giving away the entire story :)
Nate, is your question about the website or the funds at Vanguard?
Alright, while we wait to hear back from Nate, let's take one more question. Manny, you can tackle this one from Jenny
And I wonder about the term "small investor." Minimums for Vanguard funds are generally $3K in regular accounts. One of the funds on the Kip 25, Homestead Small Company Stock, has a minimum of just $500
I'll take this one. Give me a second or two to write up my thoughts
Here's a follow up from Nate
Nellie, maybe you can suggest to Nate a good broker for a newbie.
Well, I think you just helped answer Nate's question, Manny.
Well, I hate to follow up with another question, but how much do you have to invest? I ask because as Manny mentions, some of the Vanguard funds have $3,000 minimums. An ETF, on the other hand, has no minimum, and is even lower cost than must
As for a good brokerage site for a newbie, I would check out three sites: Folio Investing, ShareBuilder and TD Ameritrade.
So, it sounds like ETFs might be the better option for someone who's just starting to invest?
All three have no minimum requirement to open a fund. The first two--Folio Investing and ShareBuilder--make it easy to buy shares in stocks if you don't have a lot of money (it's a little complicated to explain in a chat--email me at firstname.lastname@example.org and I can explain better).
Sorry I should have said to "open an account"
Thanks, Nellie. Those are some great places to start.
Re fees, you want to keep fees down. The basic philosophy is that no one knows what the market or a particular investing vehicle will do in the future, but the one thing you can predict in the future is your investing costs. So, you definitely want to avoid paying loads (sales charges) and you want to keep ongoing annual fees as low as possible. This is the strongest argument for index funds. You can get index funds charging as little as 0.1% of assets per year. The average diversified domestic stock fund charges 1.3%. The difference--in this case, 1.2 points per year--is a big hurdle for actively managed funds to overcome. In picking the Kip 25 funds, for example, we try to reduce that disadvantage by looking for actively managed funds with below average fees.
ETFS make a good option for new investors because you can buy an index fund, essentially, with a low annual expense ratio and there's no minimum. Many index mutual funds have $2,000 minimums or higher
That makes sense, Nellie. Thanks.
And Manny, thanks for the detailed response on fees! I'm sure that's something many of our readers wonder about.
Alright, unfortunately it's time for us to wrap up today's chat.
Thanks for joining us. We appreciate your great questions.
Again, the thing with ETFs is that you have to know how to place a stock-like order. It's not hard but some newbies may find it a bit intimidating--at least the first time or two
And a special thanks to our investing pros, Nellie and Manny
It was a pleasure chatting with you
I hope you all enjoyed it.
Enjoy the rest of your afternoon!