If you’re looking to invest the money, one good option is an index fund. Vanguard’s US index fund, the Total Stock Market Index (VTSMX), is a good one (low expenses and broad coverage of the US stock market). Or, you could split it between that and Vanguard’s non-US fund, VFWIX, to diversify across the rest of the world.
For more on investing and index funds, there was some relevant discussion in the Procedural Knowledge Thread, here and here.
I would avoid recommending specific investments to someone without some basic knowledge in the field. That might lead to trouble down the read. Reading the Booglehead book about the vanguards might be of use.
I would avoid recommending specific investments to someone without some basic knowledge in the field. That might lead to trouble down the read.
This doesn’t make much sense to me. Investing in VTSMX over having money in a savings account probably has the highest ratio of additional return divided by effort involved, and is justified by two sentences and a question: “When you invest in a specific stock or fund manager, you’re betting that you know more about that vehicle than the whole market. When you invest in an index fund, you’re betting that the long term trend is up. Given the existence of Wall Street, which bet would you rather take?”
That is to say, one of the main reasons that sleep-at-night investing is so valuable is that you sleep at night. Set up automatic investing into your Vanguard fund, and you’re done. Knowing more of the philosophy behind it can help, and will make you less likely to panic and sell during a downturn, but the initial bump into an index fund is the main value-add.
Probably yes. But if you do not know the reasoning behind that chances are high that the first economic crisis makes you sell your stock at bad timing.
To add some more detail, you could consider this to be three pieces of advice, in increasing order of specificity:
First, if you want to invest your savings to make more money, you should strongly consider the stock market, since it tends to grow faster than other investments. But you should be aware that the stock market sometimes goes down, so you might lose money. So you should think this over and decide if it’s what you want to do.
Second, if you invest in the stock market, you should go with index funds. Index funds try to match the market, rather than trying to beat the market, which allows them to have lower fees and expenses. It’s very very hard to beat the market, and if you try to (e.g., by picking stocks or investing in an actively managed mutual fund) you’ll waste a bunch of money on fees and expenses in the process. You can read more about index funds in some of the links in this thread (including mine and James_Miller’s).
Third, if you invest in index funds, one very good option is Vanguard’s US fund VTSMX (or you could split your money between that and VFWIX, their non-US fund). There may be better options for you, but they aren’t likely to be much better. Vanguard has an excellent reputation, these funds have very low expenses and few restrictions (especially the US fund, VTSMX), VTSMX does an excellent job of matching the US stock market (and the combination does a good job of matching the world stock market), the minimum investment is only $3,000 (USD), and it’s easy to do the investing online. There are other options you could look into, including ETFs (which are stocks that are designed to match the market, rather than mutual funds) and index funds at other brokerages like Schwab and Fidelity, but don’t get stuck agonizing over which one to pick because the differences aren’t that big.
If you’re looking to invest the money, one good option is an index fund. Vanguard’s US index fund, the Total Stock Market Index (VTSMX), is a good one (low expenses and broad coverage of the US stock market). Or, you could split it between that and Vanguard’s non-US fund, VFWIX, to diversify across the rest of the world.
For more on investing and index funds, there was some relevant discussion in the Procedural Knowledge Thread, here and here.
I would avoid recommending specific investments to someone without some basic knowledge in the field. That might lead to trouble down the read. Reading the Booglehead book about the vanguards might be of use.
This doesn’t make much sense to me. Investing in VTSMX over having money in a savings account probably has the highest ratio of additional return divided by effort involved, and is justified by two sentences and a question: “When you invest in a specific stock or fund manager, you’re betting that you know more about that vehicle than the whole market. When you invest in an index fund, you’re betting that the long term trend is up. Given the existence of Wall Street, which bet would you rather take?”
That is to say, one of the main reasons that sleep-at-night investing is so valuable is that you sleep at night. Set up automatic investing into your Vanguard fund, and you’re done. Knowing more of the philosophy behind it can help, and will make you less likely to panic and sell during a downturn, but the initial bump into an index fund is the main value-add.
Probably yes. But if you do not know the reasoning behind that chances are high that the first economic crisis makes you sell your stock at bad timing.
This does look like a feasible and safe option. Will investigate.
To add some more detail, you could consider this to be three pieces of advice, in increasing order of specificity:
First, if you want to invest your savings to make more money, you should strongly consider the stock market, since it tends to grow faster than other investments. But you should be aware that the stock market sometimes goes down, so you might lose money. So you should think this over and decide if it’s what you want to do.
Second, if you invest in the stock market, you should go with index funds. Index funds try to match the market, rather than trying to beat the market, which allows them to have lower fees and expenses. It’s very very hard to beat the market, and if you try to (e.g., by picking stocks or investing in an actively managed mutual fund) you’ll waste a bunch of money on fees and expenses in the process. You can read more about index funds in some of the links in this thread (including mine and James_Miller’s).
Third, if you invest in index funds, one very good option is Vanguard’s US fund VTSMX (or you could split your money between that and VFWIX, their non-US fund). There may be better options for you, but they aren’t likely to be much better. Vanguard has an excellent reputation, these funds have very low expenses and few restrictions (especially the US fund, VTSMX), VTSMX does an excellent job of matching the US stock market (and the combination does a good job of matching the world stock market), the minimum investment is only $3,000 (USD), and it’s easy to do the investing online. There are other options you could look into, including ETFs (which are stocks that are designed to match the market, rather than mutual funds) and index funds at other brokerages like Schwab and Fidelity, but don’t get stuck agonizing over which one to pick because the differences aren’t that big.