Invest in Index Fund

[Guest james_cc]

I am planning to move my ROTH from annuity to possibly Vanguard total stock index fundI am not really intesrested in investing in any stocks right now due to slow market and time involved in researching. Have anyone been doing well with index funds like Vanguard or other leading mutual fund companies? Can you recommend some good ones?

Thanks,

James.

[John G]

I don't understand annuities in a Roth. They generally have higher expenses and no real tax advantage.

Lack of time to study individual stocks is a very good reason to look at a broad based mutual fund. Vanguard has the added advantage of extremely low annual expenses, way below other mutual funds. Since annual expenses take away from your gain, a very low rate is a good thing.

Going the index route means you will get approximately market returns. You are exposed to general market risk, you rise and fall with the overall market but with low expenses. Since index funds beat about 80+% of all mutual funds each year, this is a very strong option. Sure there are dozens of funds that can sometimes do better.... but no one knows which funds will do better in what years. You don't need to be in the top 10% of all funds to have a very respectable showing over a multiple decade time horizon. And of course, the review of fund options also takes up time.

Let your assets grow using one of the broad based index funds and later on when you are more comfortable with individual picks you can consider changing your strategy.