Best index fund for poor newbies?

Question

I only have about $650 to invest and I want to put it in an index fund. What are my options?

Answer 1

I find that I have to disagree with the previous answers. The large cap index funds have not performed too well during the last 6 years. Of course that may be getting ready to change. Who knows? In general small caps stocks have outperformed the large cap stocks, so it stands to reason that an index fund investing in small cap stocks will tend to outperform one investing in large cap stocks.

There are several options available to you.

IJS has provided a 5 year return annual of 15.5% small cap value index
DSV has provided a 5 yr return of 18.0% small cap value index
IWM 13.8% over 5 yr. small cap index

Whereas SPY has given a 5 yr return of only 6.8%

Answer 2

A fund that tracks the Dow Jones Industrial Average. ie, tracks the biggest companies in the US.

I'd tell you a good S & P 500 fund, but they haven't performed well the last few years.

Answer 3

buy ETF's go to fool.com(it's short for motley fool a very good beginner's investors guide) also look up SPY(spiders) and DIA(diamonds) SPY tracks the s&p 500 and DIA tracks the dow, basically etf's are much better than index funds due to expenses, and they are easy to obtain because you trade them just like stocks!

Answer 4

you should buy SPYders.. they are indexed with the S&P and no fees... keep some money in a savings account and buy in on the dips.. If you keep it for many years untill you retire you will do well.