i would like to for the first time, but have a bunch of questions, and not quite sure where to start, i heard S&P500 is good for beginner and easy to maintain, also vanguard charges lower on commission.
1. S&P500 or VFINX
2. can i purchase S&P500 from Vanguard or they only invest on VFINX
3. where i can purchase S&P500 stock
4. minimum investment
5. commission rate, how do they charge….. when sell and purchase??
6. how much % can i make per month, in average
7. how to read the report
Price as of 03/09/2010 5.39
Change {content}.18 0.17%
SEC yield as of 03/08/2010 1.71% B
8. can i make changes once purchase
9. can i add or deduct investment $
10. will it go negative/loss
11. does it effect my tax return annually
thanks

 

  • Paul Nixon 5:02 pm on March 15, 2010

    The Vanguard fund is not bad but it’s minimums are high.
    The Royce low price stock fund or the hodges fund may be a better choice.

  • gosh137 5:02 pm on March 15, 2010

    1) and 2) you can not purchase the S&P 500 from anyone. You invest in VFINX, the mutual fund from Vanguard (or a mutual fund from another fund family) that follows the S&P 500 index by investing in the same stocks as the index in the same proportion.
    3) nowhere
    4) for Vanguard’s fund $3,000.00
    5) commission rate none. The charge you an annual expense ratio, 0.18% of the value of the fund per year. Its taken out of the funds value so you won’t see any change or charge.
    6) Large cap US stocks, in the past have averaged around 11% per year over many years. If you check this web page: http://moneycentral.msn.com/investor/partsub/funds/returns.asp?Funds=1&Symbol=VFINX you will see that during 2006 the fund went up 15.6%, 2007 up 5.4%, 2008 down 37.0% and during 2009, up 26.5%. Your monthly returns will vary widely.
    7) On March 9, the cost to buy a share of this fund was $105.39. The change from March 8th was a gain of 18 cents or 0.17%. The fund gives you dividends once a year. If the price on 3/9 and the dividend rate remained the same for 30 days the annualized amount of the dividend would be 1.71% of the value or purchase price of the fund.
    8) & 9) You can add money to your account at any time, minimum of $100. If you sell shares within a certain amount of time after you bought shares, Vanguard can charge you a fee. Some company’s have a 60 day period, some 90 days, some 6 months.
    10) Yes, see above #6 for 2008
    11) Yes, each year they buy and sell stocks within the fund. If they have a capital gain, they figure out your share and send you the money. That, and the dividends they send you are taxable events.
    Since the index does not add or drop stocks as often as actively managed funds do, you will not have as much tax due as many active funds.

    PS I don’t think this is a good fund for beginners as it mostly contains Large cap stocks with a very few mid cap stocks. No small cap. You should also look at Vanguard’s Total Stock Market Fund VTSMX.

  • Warren534_FuturesTrader 5:02 pm on March 15, 2010

    Better off buying SP500 ETFs.
    The most popular is symbol SPY, and is about 10% of the value of the SP500 index.

    There are leveraged ETFs as well, but I wouldn’t recommend for you at this time.

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