Investing with Vanguard?

Question

I am a new investor, looking to invest roughly $500 a month, every month, for at least 10 years. I want to buy Vanguard index funds. Should I go ahead and open an individual account with Vanguard? The minimum initial investment is $3,000...does that mean I must initially "invest" the $3,000 or can I simply fund the account with $3,000?

Thank you for your help.

Answer 1

If I am not mistaken, you will need to invest at least $3000 in their index fund. Also you will need to deposit $3000 to open a brokerage account with them. Now here is the kicker. If the index fund balance is below $10,000 in each fund you will be charged $10 per year per fund.

I do have an alternate suggestion for you to consider. Open an accout with Scottrade or TD Ameritrade instead and purchase ETF index funds. There is no minimum investment into ETFs. There are over 200 available indexing various segments of the market. If you place all of your money into just one index fund, you may not be taking advantage of the relative performances of the different segments of the market. For example the S&P 500 index has performed very poorly during the last 5 years with 6% annual return, but the Russel 2000 index, small cap stocks, has performed marvellously with 13% annual return. And the Russel 2000 value index even better with almost 15% annual return.

And the indexes of foreign markets even better in many cases with emerging markets at 26% annual return. That will not last they are due for a major correction.

Here is a link to where you can compare the various index funds.

http://www.etfconnect.com/

Answer 2

Vanguard is a company that sells and manages mutual funds. Given your long-term time horizon, I recommend investing in Vanguard's S&P 500 index fund. This is a low cost way to invest in the stock market. Go to the Vanguard website and download necessary paperwork to open a new account. Initial investment is $3000 and then you can add your $500 per month.

Vanguard is a good company with a solid track record.

www.vanguard.com

Another alternative is Fidelity mutual funds.

Answer 3

Vanguard is a great company, and they have very low management fees. You may like an ETF as one of the other writers suggested, but there are advantages to being with Vanguard. I think you might like a Roth IRA and I believe the minimums are lower.

Answer 4

i had an account with them, but after seeing the funds i was in do NOTHING i started trading some stocks in the acct......but they charged $25 for a trade so i moved my IRA over to Ameritrade where it's only 9.95 a trade now.

and you can buy shares in ETF's if you think the market is still heading up......they are like index funds