Anyone 100% in Index Funds?

[Trek]

I don't have any index funds but after reading the following article on The Motley Fool, they sure sound good.

Index Funds | Index Mutual Funds | Investing in Index Funds

Especially of interest to me are the Vanguard S&P 500 Index and the Vanguard Emerging Markets Stock Index look interesting to me. Anyone invested in either of those? Happy about it?

[mathjak107]

i use about 60% managed funds and 40% index funds utilizing 2 different portfolios. for over 20 years my actively managed funds have beaten my index funds over all. i like the simplicity of the index funds, low cost is okay but not considered a priority over performance . the extra 1/2 % has brought me 1 to 2% better performance over the years.

i like the ability to trade in and out of certain etf funds if i want without waiting until the end of the day for 1 pricing.

tax wise the index funds are nice but can be quite a tax torpedo when you decide to sell or trade when very little taxes have been paid gradually all along like with active funds.

[chinaco]

We would be 100% index... except some money in in a PST with limited fund options... so there is a sizable amount in an actively managed fund and in company stock.

We will transition everything to index funds over the next few years. Currently, we are about 70% index.

[firewhen]

Outside of the 401k at work and some individual shares I hold that were bought in my younger days, I only invest with Vanguard and only in index funds. Besides the S&P 500 fund, they also have the Total Stock Market Index, which gives more small and mid cap holdings, and then dozens of slices and permutations of the market. If you are able to invest over $100k in a single fund, they have Admiral shares for most funds, which are a lower cost share class, otherwise identical, with costs about half of the Investor funds.

If you do not think you can beat the market, or find funds that can, or do not want to try, this is a great alternative. My thinking is that I do not need to beat the market, merely just be the market. As far as taxes, yes my capital gains will be (thankfully) huge when I sell, but I will manage that. After ER, I will live off the dividends, currently about 2%, and slowly sell some shares as I need to and pay the capital gains tax. Might even only be at 5% depending on the tax structure then in place. I would much rather have the taxes deferred, since I hold that money and it grows over the years.

[LOL!]

Our 401(k) plans do not have index funds in the asset classes that we want held in those plans such as fixed income, REITs and small cap value.

In our non-401(k) accounts, we only buy index funds nowadays. We will use regular index mutual funds and also index exchange-traded funds. We do have some legacy actively-managed mutual funds that we will sell whenever the taxes to do so are manageable.

If you want to really check out positive opinions of index funds, go to Guide to the Vanguard Diehards Forums

[Moemg]

I'm 60% in index funds all vanguard .

[Spanky]

over 90% in index funds.

[frayne]

60% Index funds, S&P, Extended Market, International, all FIDO Spartan MFs. .07 ERs.

[W2R]

Quote:

Originally Posted by Trek I don't have any index funds but after reading the following article on The Motley Fool, they sure sound good. Index Funds | Index Mutual Funds | Investing in Index Funds Especially of interest to me are the Vanguard S&P 500 Index and the Vanguard Emerging Markets Stock Index look interesting to me. Anyone invested in either of those? Happy about it?

Index funds are great (though no, I am not 100% in index funds or anything else... I have some cash, and TSP "G Fund" and other funds, and managed funds in my Roth IRA).

As for these two funds, I have a little Vanguard 500 in my taxable account. It, and Vanguard's Emerging Markets VEIEX are both perfectly good funds to have in your portfoliio.

[Ed_The_Gypsy]

Almost all index funds, almost all with Vanguard (would if I could). Very happy with all of them.

[Niko]

Trek, are you a resident of Estonia, an Expat, or are you just travelling/temporarily living there?

By the way, I'm 100% index, except for my emergency funds. Most is at Vanguard, but because of terrible 401K choices some funds our from other vendors.

[Nords]

Quote:

Originally Posted by Trek Especially of interest to me are the Vanguard S&P 500 Index and the Vanguard Emerging Markets Stock Index look interesting to me. Anyone invested in either of those? Happy about it?

Index investing delivers at least 70% of the returns for about 5% of the effort and a fraction of the costs.

But if you don't have a U.S. mailing address then Vanguard ETFs are probably better than Vanguard index mutual funds. And ETFs from companies like Barclays' iShares or PowerShares may be even better.

We've been treated so well by Fidelity over the last couple decades that we've never had any motivation to go to Vanguard, and we don't use their funds. If an investor has to change brokers then it's a lot easier to stick with assets that can be transferred in-kind and without extra fees for buying/selling.

[Trek]

Thanks for the replies, I think Index funds are in my future.

Quote:

Originally Posted by Nords But if you don't have a U.S. mailing address then Vanguard ETFs are probably better than Vanguard index mutual funds. And ETFs from companies like Barclays' iShares or PowerShares may be even better.

I do have a U.S. mailing address (street address at my mail forwarding company) and a U.S. phone number (through Skype).

Quote:

Originally Posted by Niko Trek, are you a resident of Estonia, an Expat, or are you just travelling/temporarily living there?

American/Estonian dual citizen, but I'm full-time ER'd in Estonia.

[Trek]

Though I got to thinking if I die, can my wife get my assets in the U.S. relatively trouble free or would that be a severe hassle, her not being a U.S. citizen or U.S. resident? I assume she wouldn't be able to keep the funds as they were.

Just sent an email to Vanguard about it, see what they say.

[Trek]

Quote:

Originally Posted by Trek Though I got to thinking if I die, can my wife get my assets in the U.S. relatively trouble free or would that be a severe hassle, her not being a U.S. citizen or U.S. resident? I assume she wouldn't be able to keep the funds as they were.

Cool. Turns out I can transfer up to $2 million in assets to my non-citizen spouse estate tax free at my death. Vanguard here I come!

[spazz]

Currently sitting at 80% Index funds, with the hopes to make the switch to lower ETF's in the near future.

[ladelfina]

Quote:

Originally Posted by Trek Cool. Turns out I can transfer up to $2 million in assets to my non-citizen spouse estate tax free at my death.

As long as you die before 2011.

[martyb]

Yes, I'm currently 100% Index funds. That's my whole portfolio. Only other thing I have going is the 2 govt. pensions I'm building. I am about to open a ROTH IRA with Vanguard for 2007, though. Probably will use a Lifecycle type fund for that, most likely a 2015 version.

[lawman3966]

I haven't used Vanguard products much, but will likely do so in the future.

I bought and have done well with EEM, which is a Barclay's ETF, tracking the EAFE index. But, Vanguard has an ETF called VWO that tracks the same index at a lower management cost. When I've compared the two on the Yahoo finance site, VWO has generally won out. For various reasons, including your location, ETFs may be preferable to mutual funds.

VTI is Vanguard's ETF for the total U.S. stock market index (the Wilshire 5000 index). This has an expense ratio of only 0.07% - which I think is the lowest on record.

I think index funds should be the default selection. On certain occasions some new shining start of a fund manager may catch your eye, but I think those are the exceptions not the rule.

I also own some Berkshire B shares, which I treat as a balanced fund of sorts. It's good for taxable accounts since it does not pay any dividends and has usually exhibited less volatility than the market as a whole.

[Culture]

Yes, I am 100% in index funds, outside of my Vanguard money markets funds and equity ownership in my small business. I am completely happy with the results.

My index funds are mostly Vanguard but because of 401(k) and 403(b) limitations, also include Fidelity (spartan funds are as good as Vanguard) and Mutual Of America (Ugg!).

The key with index funds is the asset allocation issue. I am invested in large, medium and small US indexes, short and intermediate term US bond indexes, emerging and developed overseas indexes and REIT indexes. My allocation is NOT market weighted, but is weighted toward US and Small equities, and is 65% equity and 35% cash/bonds. The only assets I do not invest in are overseas bond, precious metals and commodities. These will come when they are not overpriced (yes that is market timing).

I own no managed funds unless you consider money market funds to be managed.