Whats a good stock to invest in
I want to start a portfolio of some companies that could be big soon. Any suggestions?
31-35, F
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SomeMichGuy · M
Index funds are a very good way to diversify and also not pay advisors to lose money for you.
[i][u]FYI on Indexes/Index funds[/u][/i]
Index funds are mutual funds which are based upon a market index. On TV news, you will often see the Dow Jones average--formally, the Dow Jones Industrial Average/DJIA--the S&P 500, and NASDAQ. The New York Stock Exchange's (NYSE) movement is largely captured by the DJIA, which is comprised of the largest companies on the Exchange, by total capitalization of stocks. The S&P 500 incorporates the DJIA and adds many other stocks to get to 500 total companies. The NASDAQ was typically for companies without enough market capitalization to break into the NYSE, and is seen as somewhat tech-centric. There are lots of indexes based on stocks--including certain areas of business, such as the energy sector, the tech sector, etc.--bonds, etc.
Indexes are maintained by major companies; Dow Jones maintains a set, Standard & Poor's (the "S&P"), etc. "Maintain" means these investment-/market-oriented firms maintain the list of stocks in their various indexes according to their selection rules--they change as businesses grow, merge, wither, etc.--and also maintain the current reading of the index. This means that any investment company (or even an individual, but that's a tad crazy) can simply get the list of stocks, and buy them in the amounts/proportions indicated, and--[i]voilà![/i]--you are now mirroring the index.
Because of THAT, index funds are said to be "unmanaged", meaning you don't pay someone else to make investment decisions, which is typical of non-index funds of whatever investment strategy (value investing, balanced, high growth, income, growth and income, etc.).
Why is that important? One big reason is that, just like taxes, any costs to your investing reduce your returns (your ROI, Return On Investment); so paying someone to actively manage a fund increases costs, and decreases returns.
But the biggest reason is this: very few funds outperform the appropriate index, and nearly none *consistently* do so. So when you pay for someone to actively manage a fund, you are effectively paying someone to lose you money.
Vanguard invented index funds because John Bogle didn't want people wasting their money. They also have very low fees (I don't sell them, etc., but have used them for many years), and are "no load" funds...which are costs to buy or redeem shares.
Start investing soon.
And open a Roth IRA if you can (to add money after taxes, to grow tax-free for your retirement and NEVER have to have taxes on it) and fund it to the hilt. Starting now will make it easy, and give you the benefit of compounding over time.
[i][u]FYI on Indexes/Index funds[/u][/i]
Index funds are mutual funds which are based upon a market index. On TV news, you will often see the Dow Jones average--formally, the Dow Jones Industrial Average/DJIA--the S&P 500, and NASDAQ. The New York Stock Exchange's (NYSE) movement is largely captured by the DJIA, which is comprised of the largest companies on the Exchange, by total capitalization of stocks. The S&P 500 incorporates the DJIA and adds many other stocks to get to 500 total companies. The NASDAQ was typically for companies without enough market capitalization to break into the NYSE, and is seen as somewhat tech-centric. There are lots of indexes based on stocks--including certain areas of business, such as the energy sector, the tech sector, etc.--bonds, etc.
Indexes are maintained by major companies; Dow Jones maintains a set, Standard & Poor's (the "S&P"), etc. "Maintain" means these investment-/market-oriented firms maintain the list of stocks in their various indexes according to their selection rules--they change as businesses grow, merge, wither, etc.--and also maintain the current reading of the index. This means that any investment company (or even an individual, but that's a tad crazy) can simply get the list of stocks, and buy them in the amounts/proportions indicated, and--[i]voilà![/i]--you are now mirroring the index.
Because of THAT, index funds are said to be "unmanaged", meaning you don't pay someone else to make investment decisions, which is typical of non-index funds of whatever investment strategy (value investing, balanced, high growth, income, growth and income, etc.).
Why is that important? One big reason is that, just like taxes, any costs to your investing reduce your returns (your ROI, Return On Investment); so paying someone to actively manage a fund increases costs, and decreases returns.
But the biggest reason is this: very few funds outperform the appropriate index, and nearly none *consistently* do so. So when you pay for someone to actively manage a fund, you are effectively paying someone to lose you money.
Vanguard invented index funds because John Bogle didn't want people wasting their money. They also have very low fees (I don't sell them, etc., but have used them for many years), and are "no load" funds...which are costs to buy or redeem shares.
Start investing soon.
And open a Roth IRA if you can (to add money after taxes, to grow tax-free for your retirement and NEVER have to have taxes on it) and fund it to the hilt. Starting now will make it easy, and give you the benefit of compounding over time.