Anyone invest in them ? What's your experience?

According to what I've read, most money managers can't beat the relevant index over a long period (more than a few years) of time. This makes investing in an index mutual fund a wise move for most people, especially those getting started in investing.

I haven't followed that advice, however. Somehow striving for mediocrity doesn't enthuse me. I like to invest in funds I think will beat the indexes. Sometimes I'm right, sometimes I'm wrong. But it entertains me to try.

Jim

I think it is the best way to invest. I also like ETF's. What questions do you have about them?

By being average you’ll be above average. Read “A Random Walk Down Wall Street” if you want the full scoop on index funds. So far, I haven’t gone wrong using index funds. Notice James’ second to last sentence above.

Listen to these guys.

Jim

Mine have done as well or better than the managed funds and are typically lower cost with lower annual expenses. Very good long term investments from my perspective. Some capital gain distribution tax advantages as well as managers are not buying and selling within the fund as they see fit. Yes there may be more capital gain when sold but then there is more money growing every year as you don't need to pay the capital gain distribution tax whenever sales have taken place.

Bryce

Almost all my money is in index funds. I keep a little play money on the side that I invest in individual stocks that I trade from time to time. My index funds ALWAYS outperform the money I actively invest.

In fact, managed funds handled by professionals under perform index funds. If you hire a financial manager to manage your investments, they feel a need to show you how much they're doing for you and they often get paid when they trade. so, they do stuff - and bill you when they do. If you just buy index funds and let them sit, you'll make more money and pay less in fees.

A critical part of choosing a fund is the fees. I look for funds with no transaction fee - which is what you pay when you buy it, and "no load" - which means nobody is getting a commission on the sale. There are still going to be other management fees. I look for funds with a "total expense ratio" (that's all the annual fees added together) of less than 1%. I have one fund that has an expense ration of 1.05%.

There are lots of kinds of index funds. Some funds have stocks from the entire market. Some from only the top performers in the market. I like the following:

TRBCX - a "blue chip" fund that includes the top 30 companies in the market like Apple, Boeing, Home Depot.
TRSPX - a S&P 500 fund that includes all 500 companies in the S&P 500 - these companies are the big guys that the rest of the market is measured against.
NASDX - a "nasdaq 500" fund that includes the 500 top performing companies in the NASDAQ stock exchange.

To find a fund you like, you can use an online "stock screener". Many of these have options to search index funds and not just stocks. You enter your criteria such as 10 year growth rate, transaction fees, etc. and it gives you a list of funds that fit your criteria.

You're a young guy. I would be looking at funds that have long term growth and not get-rich-quick funds. I'm in my 50's and I look for funds that have done well over at least 10 years. Winners usually keep winning so I invest with the funds that have won the most over the long term because I'm in for the long term.

The secret to wealth is to invest and NEVER use any of the investment money. You need a car repair and take $1,000 out of the investment. If you had taken an uber for a couple of weeks instead and left the 1,000 in your investment, making 10% interest (very possible), for 40 years, that $1,000 would turn into over $53,000 dollars. That car repair cost you $53,000! NEVER Take money out of your investments.

Smart move. Start investing now and soon you will be far ahead of most of your peers.

Pennies invested today turn into dollars of tomorrow. The key to independence is wealth. It is not what you make. It is what you spend.

Go on Amazon and get a short and inexpensive book titled; " Nobody Knows Anything: Investing Basics Learn to Ignore the Experts, the Gurus and other Fools".
Reading this book has the potential to give you more wisdom than 90% of financial advisors out there have.

I have done well over the years investing in S&P500 Index funds. I've reached the age where now I'm trying to plan accessing that money in a smart way in retirement. As a serviceman, you should check out TSP, (Federal Thrift Savings Plan). It is essentially a 401K for Military and federal employees. The TSP "C Fund" is a SP500 index fund and it has pretty low fees. They have other funds as well, but I invested in the C Fund and it grew steadily over the years. The key is to steadily chip in an amount each paycheck and don't worry too much about it. It worked well for me. It was originally just for civil service workers, and opened to military members late in my military career. I sure wish I could have invested in it from day one. You pay office should have the details.

Can't beat them for the long run, every money manager chases the DIA and some win, some lose. Get a large cap, mid cap and small cap plus bond fund and international. Let them ride and you are good to go. John Bogle of Vanguard has a great book on index investing.

Vanguard VTI is all you need to grow wealth and beat all the money managers. Open an account and start investing today.

start listening to Dave Ramsey.

I suggest target funds for most folks. You pick based on approximately when you will retire. They capture all of the benefits mentioned above but give you automatic diversification and balance (and re-balance for you).

Staring out Index funds are idea. As identified above, most investors can’t beat them In the long run. The majority of my money is invested in index funds, with a little set aside for more risky ventures. As also identified above, get a book or two on simplified investing, it will be money and time well invested.

And what happens when you hit the target retirement date...and realize you may have another two or three decades to invest and maybe live off the money.

Jim

For a while when having heart issues, I turned over our monetary assets to a fund manager who charged one percent fee per year. After one year, he proudly announced he'd achieved a 6.7 gain for us. That was in a year when the S&P index returned 19 percent. To top it off, he had our money in mutual funds...the wrong funds. So we were paying the regular mutual fund fees, plus one percent to the money manager. Not one percent of the gain, but one percent of the assets.

I had our money sent to Fidelity, set up a brokerage account, and invested in four- and five-star (Morningstar ratings) mutual funds. Have done much better on my own. I once got burned completely when I bought two individual tech stocks, and lost the whole investment. So I stick to mutual funds now. I don't have the time or interest in being a stock picker. I'm a picker of stock pickers. I do twice a year reviews to sell the stinker funds and maybe buy a replacement. If a fund sinks to three stars, it's got to offer something pretty attractive for me to keep it.

I've invested in growth and value funds in three categories: large, medium, and small companies. Plus a good international fund. To me, that's a good core investment. I also have sector funds in tech and health care, but I more consider this money for playing around.

Jim

I like the research tools at Fidelity. Here is the page that distills the prospectus for one of my favorite funds, Fidelity Blue Chip Growth Fund. https://fundresearch.fidelity.com/mutual-funds/summary/316389303?type=sq-NavBar

This page offers a lot of useful info for investors. The top left section reveals that the fund is Morningstar-rated five stars, that returns have been high, expenses about average, and risk a little higher than average.

Moving down on the left under "Details" we find that the fund's Morningstar category is large growth, the date of inception of the fund, its size, and so on. The most important info here is probably the gross expense ratio, which in the case of Blue Chip Growth is .79%--which is lower that most large company growth funds.

In the middle top, there's a graph that shows the BCG fund's performance, as compared to two relevant indices, over the last ten year period. You can see that $10,000 invested ten years ago would now be worth $72,000 in the BCG fund, $59,000 invested in the Russell 1000 Growth index, and only $47,600 in an index of growth mutual funds.

So BCG fund is a rare creature: a mutual fund that has beaten the index for at least ten years. Seems simple--we should invest in this one, right?

Not so fast. Just because the fund has outperformed over the last ten years doesn't mean it will continue to outperform over the next ten. The fund manager, who picked the funds investments for the whole ten year period, may leave next year, leaving the fund in the hands of an untested newbie. Lots of stuff can happen. Maybe, instead of stock-picking acumen, the manager has just been lucky, and his luck is about to run out. At this point if you buy, you're gambling. But it's an educated gamble.

This is a simplified explanation of how I pick mutual funds.

Jim

The Ole Man told me years ago,,"Invest in land,,its the only thing they cant make more of." Take that for what its worth to ya Woolfy.