Let's be honest, not everybody understands or can take the time to understand the stock market. What do you do if you can’t seem to figure out what stocks to buy out of the thousands in the market?
Great article, thanks for posting. For a newbie like myself, confused as how to start off with $1000 in this index. It says one stock of this is over $3,000 a share? So if I deposit $1000 to start, am I buying a fractional share? And contributing to just a fraction of a share monthly with $100? Or am I getting the concept wrong since this is a fund, not a typical stock?
If your broker allows fractional investing (many brokers do), you can start up with $1000 and continue adding more money to your portfolio until you have a full share or more. The performance of your portfolio will still track the index irrespective of whether you started with a full share or a fraction of a share.
The only potential downside is that you may or may not be eligible for dividends until you hold a full share - I think it depends on the fund managers.
Makes sense, I appreciate it. But the general concept is true for investing in general and using those numbers to add every month and seeing their average returns. Are there other ones you'd recommend to? If one has a 401k already, would you recommend doing just one index fund and contributing X amount or having more than one and contributing less than you would with just one fund?
I think it depends on the specifics of your investment circumstances.
If I already have a 401k, I would probably keep maybe 1 or 2 index funds just for the fact that it will be more accessible without penalties than funds in a 401k.
I will also probably allocate a very small fraction of my capital to the TQQQ which has a 3X leverage on the tech-heavy NASDAQ.
Warning, if the NASDAQ-100 gains 1%, the TQQQ will gain 3% but the reverse is also true and you’ll lose 3X more.
Great article, thanks for posting. For a newbie like myself, confused as how to start off with $1000 in this index. It says one stock of this is over $3,000 a share? So if I deposit $1000 to start, am I buying a fractional share? And contributing to just a fraction of a share monthly with $100? Or am I getting the concept wrong since this is a fund, not a typical stock?
Hi Kyle, thanks for the kind words.
If your broker allows fractional investing (many brokers do), you can start up with $1000 and continue adding more money to your portfolio until you have a full share or more. The performance of your portfolio will still track the index irrespective of whether you started with a full share or a fraction of a share.
The only potential downside is that you may or may not be eligible for dividends until you hold a full share - I think it depends on the fund managers.
Makes sense, I appreciate it. But the general concept is true for investing in general and using those numbers to add every month and seeing their average returns. Are there other ones you'd recommend to? If one has a 401k already, would you recommend doing just one index fund and contributing X amount or having more than one and contributing less than you would with just one fund?
I think it depends on the specifics of your investment circumstances.
If I already have a 401k, I would probably keep maybe 1 or 2 index funds just for the fact that it will be more accessible without penalties than funds in a 401k.
I will also probably allocate a very small fraction of my capital to the TQQQ which has a 3X leverage on the tech-heavy NASDAQ.
Warning, if the NASDAQ-100 gains 1%, the TQQQ will gain 3% but the reverse is also true and you’ll lose 3X more.