10 Lower Cost S&P 500 Index Mutual Funds
Regular readers know that The Skilled Investor advocates a very boring, low cost, broad market, passive index investment strategy. Costs less. Gets the broad market return — whatever that will be. Narrows the range of outcomes and therefore the risk to your long-term personal financial plan. Takes far less time. Furthermore, extensive financial research has shown clearly and overwhelmingly that a passive, low cost index strategy for individual investors tends to be superior from a risk-adjusted, after-tax net returns standpoint. The Skilled Investor advocates strategies that are in line with the general investment strategy stated above.
You will never get a stock or bond tip here. Ever. Purchasing individual stocks and bonds tends just to be a big waste of your valuable money and time.
Very broad and very low cost passive index mutual funds and ETFs are the way to go. Funds can give you professionally managed, cheap, and broad diversification that you cannot achieve by yourself. (See these articles on The Skilled Investor website: “Investment securities markets do not pay you for the risks of holding individual common stocks and bonds” and “What is the cost to individual investors of sub-optimal portfolio diversification?“)
(Concerning the boring aspect of all this, this strategy also means that you are more likely to reduce your personal production of stomach acid. When you decide NOT to spend some small or large proportion of your life paying attention to the fates of individual companies that you cannot foresee and cannot control, then you have less to worry about. However, a passive strategy will still give you the excitement of riding bull and bear markets, as if you really need that kind of unavoidable stimulation.)
Unfortunately, the index mutual fund and ETF investment space is becoming a minefield for individual investors lately.
Given the growing popularity of index fund investing, many new supposed “index” mutual fund and ETF products have been introduced to the market that may not necessarily serve the interests of passive, buy and hold investors. Some of the index investment land mines out there are high index fund costs, active “index” management, and new indexing definitions and concepts that stray from the original asset weighted capitalization concept that has served individual investors so well for several decades.
Measured by invested assets, the S&P 500 index is the most common index fund benchmark in [...]