http://www.bogleheads.org/wiki/Video:Bogleheads®_investment_philosophy
Watch those videos
The easiest, and I think best way to invest, is to invest in 3 funds
Vanguard Total Stock market
Vanguard Total International Market
Vanguard Total Bond Market
Why? Diversifcation and low fees. You will not beat the market, you will follow the market, at a very low cost.
You might say, but why not pick stocks or pay a guy to beat the market for me?!? Well, the problem is, is that no one can consistently do it over the long term
http://www.zerohedge.com/news/2013-...-index-funds-beat-996-managers-over-ten-years
Good luck finding that .4% fund that actually beats the market
And fees. Oh god the fees. A broker is a stupid idea. You are just throwing money away. A 1% fee might not seem like a big deal, but it is, especially if he invests in 1% expense ratio stocks. That means you just lost 2% out of your return right there. Thats does not mean you are left with 98%. That means you are left with 5% instead of 7%. Plus, Turnover rate is not included in the expense ratio, and a TO rate of 100% is about 1% expense ratio, and a lot of actively managed funds have a TO rate of about that. So now you'll get a 4% return instead of a 7% return
what does that mean for you?
Amount invested : $10,000
Annual return : 7.00%
Projected expense ratio is : 3.00%
What if the expense ratio is : 0.10%
Your investment returns over 30 years will be $41,583 more if the actual expense ratio is 2.9 percentage point(s) less than the projected.
Projected expense ratio
Actual expense ratio
3.00% 0.10%
Net market value after Difference
1 year $10,400 $10,690 $290
5 years $12,167 $13,960 $1,793
10 years $14,802 $19,488 $4,686
15 years $18,009 $27,206 $9,197
20 years $21,911 $37,980 $16,069
30 years $32,434 $74,017 $41,583
You just lost 41 thousand dollars 30 years from now because you decided to go with a broker who chose actively managed funds instead of doing it yourself and investing in low cost index funds
Best part about low cost index funds is that it is incredibly easy and simple and takes absolutely zero knowledge or know-how of the market/economy/business. Just stick 40% into the US, 40% into international, and 20% into bonds and you are good to go. You wont have to worry about it further
Put your money in a mattress and wait for the next crash. Market is way overpriced now.
http://www.multpl.com/
Not really. a 19 p/e isnt that far from the norm
