[FRPLG]

Originally Posted by Schneed10

I'm echoing FRPLG and Saden. Index funds are highly preferable to ETFs.

ETFs are an investment vehicle designed to accomplish the same thing as index funds, but they were intended for brokers and advisors to have an opportunity to earn more commission and higher fees for the brokerage houses that sell them. Translation: it costs you a lot more in fees to be in SPYDERS / ETFs than it does to be in a comparable index fund.

Index funds and ETFs are intended to take a passive approach to the market. There is tons of academic research out there showing that this is the most efficient approach to investing. It's just that index funds will cost you way less. I highly suggest either Vanguard or Fidelity for mutual funds. Their fees are the cheapest in the business, and all S&P 500 index funds are created equal when it comes to performance, so why pay the higher fees?

For my own personal investments, I put about 50% of my money in two mutual funds (Fidelity ContraFund and Fidelity International Discovery fund) that have outpaced their comparable index every year for the last 10 years; the fund managers have reached near-legendary status on Wall Street. It's hard to argue with the strategy of finding the best stockpickers to pick your stocks for you. Sure enough, ContraFund is up 15% compared to the S&P 500's 5%. And fees on these funds are less than 1%, whereas a broker or financial advisor will never charge less than 2.5%. Then along with those investments, I keep 35% in a passive S&P 500 index fund. And the other 15% is small cap.

That makes me all stocks. In your 20s and 30s, you're best suited by riding the ups and downs of the stock market. Even in recessions when you lose a lot of value, don't fret, because in the inevitable bounce-back year you'll make it all up.

I know that's more than you were asking for, SS. But in short, go for index funds at the big mutual fund houses in lieu of ETFs.

Just to add to this. When picking a mutual fund make sure to look at the manager.. .not the fund. It's great to get into a mutual fund that has outpaced the market for awhile but if it has a new manager then it isn't the same fund. Look for high performing managers.