Index Funds

JeffBox · #1 (**permalink**) 11-09-05, 04:19 PM

For someone who isn't very interested in trading stocks often (cough), do you think that buying an index fund such as the S&P500 for a long term (30+ years) retirement savings would be a good idea? Over a long period of time, the returns are pretty good at least in the past especially for a liquid and completely passive investment.

Stocktrading101 · #2 (**permalink**) 11-09-05, 04:25 PM

Well it really depends on what you are looking for return wise. Historically the market always goes up (actual % of x year I am not sure of) so buying a tracking stock like the QQQQ would prove to be profitable long term. In my mind I ask myself the all important question, "Can I do better than that?", and if you believe you can do better than a couple % points a year, then an index tracking fund isn't for you. The other factor to take into consideration is your age, because the younger you are the more risk you should technically take, the older the less. If you meet with a broker one of the first things they will ask you is what category you would fall under: very agressive, agressive, moderate, somewhat conservative, or very conservative. Typically that really depends on your age. Hope that helps.

Regards,

JeffBox · #3 (**permalink**) 11-09-05, 04:30 PM

Interesting. I do remember hearing that the younger you are the more risk you can/should be exposed too. The reason I was interested in an index was the % return. As I recall, I thought it was around 10% per year but maybe that is way off? I'm sure there are statistics on this somewhere. The question, "can I do better?" is definitely relevant here so that's something to think about. I think the answer is yes, but it wouldn't hurt for the sake of diversification to have a % of my money in the stock market.

spncr2 · #4 (**permalink**) 11-10-05, 05:08 PM

The level of risk is totally correct. Trading real life at 15 yrs old, I would consider myself a moderate trader. I would love to get into a little more risk hopeing for the large returns, but I am learning a HUGE SUM by simply studying charts and learning from my piers. In the near future, hopefully you will see me as an "aggressive trader." Time will tell.

All the best,