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Posted: 10/13/2006 6:20:58 PM EDT
I've been really trying to hammer this one out for a while now.  

The pros of the stocks are extremely low cost to purchase and no cost to maintain.
The cons are less diversification.  If a value investing approach is followed, diversification should be less critical.

The pros of index funds are low cost to purchase and a 'hands off' attitude along w/ great diversificaiton.
The cons are maintenance fees which eat into the return every single year. (a compound penalty, if you will).  Also, mediocre returns are to be expected.

what would you do?

Link Posted: 10/13/2006 6:27:39 PM EDT
[#1]

Quoted:
I've been really trying to hammer this one out for a while now.  

The pros of the stocks are extremely low cost to purchase and no cost to maintain.
The cons are less diversification.  If a value investing approach is followed, diversification should be less critical.

The pros of index funds are low cost to purchase and a 'hands off' attitude along w/ great diversificaiton.
The cons are maintenance fees which eat into the return every single year. (a compound penalty, if you will).  Also, mediocre returns are to be expected.

what would you do?



Buy ETFs.  You can trade them like stocks, and they tend to have very low cost structures.
Link Posted: 10/13/2006 6:53:25 PM EDT
[#2]

Quoted:

Quoted:
I've been really trying to hammer this one out for a while now.  

The pros of the stocks are extremely low cost to purchase and no cost to maintain.
The cons are less diversification.  If a value investing approach is followed, diversification should be less critical.

The pros of index funds are low cost to purchase and a 'hands off' attitude along w/ great diversificaiton.
The cons are maintenance fees which eat into the return every single year. (a compound penalty, if you will).  Also, mediocre returns are to be expected.

what would you do?



Buy ETFs.  You can trade them like stocks, and they tend to have very low cost structures.


What's the advantage?  i'm not familiar w/ ETF's.
Link Posted: 10/13/2006 7:27:34 PM EDT
[#3]
Are you only looking at stocks and index funds?  There are hundreds of investments out there.

What's your time horizon?
How proactive are you willing to be?
What matters most to you in a stock?  (dividends, etc)
How risk averse are you?


An Index Fund follows an index - the S&P should get you 8% or so.  In my opinion, the attractiveness of such an investment is the "set it and forget it" trait (well, that and they will outperform most other mutual funds over the long term).  Contrarily, if I have 10 hours a week to spend investing, I wouldn't look at stocks at all.  Risk can to an extent be managed, but do you have the time and/or desire to do so?

Buying into one in no way should preclude you from looking at attractive stocks (or bonds for that matter), not to mention other, more active but time-intensive and potentially riskier investments.

Whatever you do, don't fall into the trap of speculation, by listening to "stock tips" from your co-workers at the coffee pot or whatever.
Link Posted: 10/13/2006 7:40:30 PM EDT
[#4]

Quoted:
Are you only looking at stocks and index funds?  There are hundreds of investments out there.

What's your time horizon?
How proactive are you willing to be?
What matters most to you in a stock?  (dividends, etc)
How risk averse are you?


An Index Fund follows an index - the S&P should get you 8% or so.  In my opinion, the attractiveness of such an investment is the "set it and forget it" approach.  Contrarily, if I have 10 hours a week to spend investing, I wouldn't look at stocks at all.  Risk can to an extent be managed, but do you have the time and/or desire to do so?

Buying into one in no way should preclude you from looking at attractive stocks (or bonds for that matter), not to mention other, more active but time-intensive and potentially riskier investments.

Whatever you do, don't fall into the trap of speculation, by listening to "stock tips" from your co-workers at the coffee pot or whatever.


thanks PeteCO

My time horizon when i retire will be about 30 years.  My healthcare will be covered.  I'm only concerned w/ maintaining/growing my deferred comp.  I have pension to look forward to and my concern is my deferred comp.

I expect to have approx 250,000 in my deferred comp upon retirment.  That is what im wanting to make decisions about.  My house will be paid for, kids in college is already factored in, i just need to think of my wife and myself.  she works and also has a pension. She will be working another 10 years after i retire.   i just need to get the maximum benefit from my deferred comp.  i can roll it over into an IRA, but, then what?  



ETA:  My risk aversion is fairly low.  If i were younger I would not worry about it.  The older we get, the less we can ride out the risk.  I'm not sure what you mean by being proactive.  My goal is to invest my deferred comp retirement for future needs.  


Link Posted: 10/13/2006 8:17:14 PM EDT
[#5]
I'll not be foolish and suggest how you should invest your money.
And you'll not be foolish and invest based on the advice of internet
experts - including myself.

But I'd like to point out that the fees on Index Funds do not have
to be significant.  Vanguard, the index fund king, charges me
something like 0.20% per year.  That is 1/5 of 1 percent.  I'll pay
that anyday for the returns I get.

YMMV,
DanM
Link Posted: 10/14/2006 5:42:06 AM EDT
[#6]
Link Posted: 10/23/2006 6:20:35 PM EDT
[#7]
I would get a handful of good large cap dividend paying stocks from companies that have consistently increased their dividends each year for the past 20 years or more.  Over the years reinvest all dividends and add more to your holdings along the way, such as $100/month.  

In 30 years when you retire you will be going out to your mailbox and picking up fat checks each quarter that will finance your life during retirement.  

You generally get some decent price appreciation as well from these types of companies along with 2-4% of guaranteed return each year from dividends alone.  Most of these stocks will split every 5-10 years as they double in price doubling your shares in the process.  

Buy stocks from companies that make stuff that everyone has to have and which are the leaders in their fields and have increased dividends for the last 20+ years.  Get stocks from energy, banking, consumables, retail, and luxury, basic materials, etc..  

I would suggest XOM, BAC, PG, lorilard tobacco, VLO,  OXY, JNJ, EMR, etc..  For example, XOM has increased dividends at least 5% for the past 25 years.

You wont go wrong by owning these stocks as long as you intend to keep them for a long time because there will be short term price fluctuations from time to time.

Link Posted: 10/23/2006 6:26:07 PM EDT
[#8]
Link Posted: 10/23/2006 6:35:09 PM EDT
[#9]

Quoted:
I would get a handful of good large cap dividend paying stocks from companies that have consistently increased their dividends each year for the past 20 years or more.  


you can get pretty well there with a single ETF -> DVY
quicktake.morningstar.com/ETF/Snapshot.asp?Country=USA&Symbol=DVY&fdtab=snapshot
moneycentral.msn.com/investor/partsub/funds/etfsnapshot.asp?ETF=true&Symbol=DVY

FUND SUMMARY
The investment seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the Dow Jones Select Dividend index. The fund uses a representative sampling strategy to try to track the index. The index is comprised of one hundred of the highest dividend-yielding securities (excluding REITs) in the Dow Jones U.S. Total Market index, a broad-based index representative of the total market for U.S. equity securities.

Analyst Report Summary
This fund has become the largest index offering in the mid-cap value category in record time. There are good reasons for its popularity: It's a cheap pure play on stocks with above-average yields at a time when more and more investors are realizing the value of dividends.

----

ps:
once you understand what DVY is about, you may want to check out CVY:
www.thestreet.com/_yahoo/funds/etftuesday/10310991.html?cm_ven=YAHOO&cm_cat=FREE&cm_ite=NA
finance.yahoo.com/q?s=CVY


ar-jedi

Link Posted: 10/25/2006 9:07:06 PM EDT
[#10]
If you're not sure, then index is your answer.  Diversified, cheap and very low PITA factor.  

I've been investing for 10 years now and I've never bought an individual stock.  Guess I'm too lazy to do the research that I feel that I would have to do.  That and I believe in the Efficient Market Theory.
Link Posted: 10/31/2006 5:51:37 PM EDT
[#11]
Go to the NoLoad FundX web site and read their information.  It takes all the guess work out of investing and includes ETF's.  To good to be true? Maybe but I have subscribed to their news letter for many years and the do make sense.

John
Link Posted: 10/31/2006 7:29:39 PM EDT
[#12]

Quoted:
Go to the NoLoad FundX web site and read their information.  It takes all the guess work out of investing and includes ETF's.  To good to be true? Maybe but I have subscribed to their news letter for many years and the do make sense.

John


The problem with something like NoLoad FundX is that it kills you with trading fees--they have you going in and out of funds so quickly that you will rack up big money in mutual fund trading penalties.

It is also a trend following strategy, which means that it sometimes goes wrong and gets hammered.
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