How to Invest in Stock Index Funds

The best investment out there is (IMHO)stock-based index funds. If you are closer to retirement age, then you need to research bonds, but otherwise stock Index Funds are the place to start.

I invest in funds that are linked to indexes (or if you prefer, Indices… I can roll that way too, dog!)

What’s an index? An example of index is the S and P 500…basically it is a system of tracking 500 stocks and their performance as a benchmark of overall market performance.

Ok, now that you know all about indexes [indices], I will say I like index-based funds because:

* Fund Managers attempt to beat an index (generally the S and P 500) and most of them fail to do so. So if you do as well as the index, you are getting a better return than most managed funds.

* The manager of a fund has to get paid. An index fund does not have a manager, so the expenses on managed funds are generally higher than on index funds.

Ok, so now you have a clue about what you want to buy, namely: Stock-based index funds. So, you might be thinking, Which funds should I buy? That’s why I like you so much, reader, because you ask such wonderful questions!

This brings up the wonderful topic of Where to put your money, which is otherwise known as: (Drum roll, please)

Stock Index Funds: Asset Allocation!

Stock Index Funds: Scenario #1:

Stock Index Funds Question: I’m busy, so I only have time to invest in ONE fund, any help?

A: If you only get one fund, then I suggest you get a fund based on the S&P 500 Index. Most 401k plans will offer such a fund. These get you build-in diversity of 500 companies. Some fund ideas are:

* SPY: ETF called Spiders.

* VFINX: Vanguard’s S and P 500 Fund.

Stock Index Funds: Scenario #2:

Stock Index Funds Question: I have a little bit more time to devote to investing; do you have any more ideas?

A: Sure! If you do a little research, you will find these categories of options that are labeled Asset Classes and funds within each class. Here’s a break down of how I do my Asset Allocation:

US based funds (Domestic)

US Large Company Funds: 20%

US Large Value Funds: 20%

US Small Company Funds: 10%

US Small Value Funds: 10%

Foreign Funds (Overseas)

Foreign Large Funds: 15%

Foreign Large Value Funds: 10%

Foreign Small Company Funds: 10%

Emerging Market Funds: 5%

Stock Index Funds Question: How do I find good funds of each class?

A: I’m glad you asked. You should do the research and find funds that have a low expense ratio…lower is better, because it is the money you pay to own the fund.

I did a little research (not using my broker, so you can too) and found out that Vanguard has a good link that shows the different funds (ONLY that they sell, of course).

Stock Index Funds Question: I don’t have enough money to invest in all of these funds. Which funds should put my in money first?

A: My method is invest in U.S.-based funds first, and from top to bottom. It took me several years to purchases funds in all of these classes.

Stock Index Funds Question: Ok, but what happens when the value of a fund within a class exceeds its target allocation?

A: Well, first…THAT’S GREAT!!! It means that you are making money!!! Don’t worry about it.

You re-balance once per year. I keep a spreadsheet in which I enter the total amount of money invested and then calculate the target percentage and compare that to the actual amount of money I have in the fund.

If I have too much money in a class, I sell shares of that fund class. If I don’t have enough in a class, I buy more shares of that fund class. I only do this once per year in order to keep my transaction fees minimized.

Some people re-balance every three years…try it both ways…but I recommend at least this checking once every year.

Stock Index Funds Question: What is a transaction fee?

A: Every time you buy, sell, or exchange funds, you are charged a fee (these vary by broker and fund).

Stock Index Funds Question: Do I have to pay taxes when I sell?

A: In a taxable account, YES! That is why tax-advantaged accounts are so cool.

And another reason to only re-balance once per year. You really want to hold onto a fund for at least one year, plus one day, in order to ensure your capital gains taxes are at the lower “long-term” rate.

(If you make a profit, of course, that’s what capital gains taxes are all about. If you lose money, that’s a whole other proposition, and maybe a topic for another post!, but you don’t pay tax on a loss.)

Stock Index Funds Question: How much money do I need to start?

A: Good question!! Every fund has a minimum opening investment, generally in the range of $2000 – $3000 dollars. This is an added wrinkle when trying to establish an opening position in a new fund.

You might have left over money, but not enough to open up a new fund. In that case, the only thing you can do is spread out that extra money in the funds you already own and wait for them to grow.

You see, once you have a position in a fund, you can add to it in any amount, small or large.

For example, if I already made my initial investment in VFINX for $3000, and I want to add $1000 the next year, I can do that. But, I can’t take that $1000 and invest it in a new fund if the new fund has an initial investment of more than $1000.

If you don’t have any funds at all, and you are looking to get your first one, but you don’t have the minimum amount to open that position, you’ll have to either find a fund with a smaller opening investment, or just hold on to that extra money until you do have enough to get into to the larger ones.

THAT’s it…I used this method to built my core of investments…now I am doing the explore…where I buy stock in great companies…but that is another article for another day!

Steps in Creating Your Success From Home Business

It is estimated that over 50% of the American population are involved in some form of home based business. Overall a home based business can be a rewarding experience both financially and personally. However as with any other type of opportunity it is important to do your homework before committing to the opportunity to determine if it is right for you.

Having a successful home based business provides many advantages such as flexibility, financial independence, and the opportunity to create the lifestyle you want. Working from home and growing your home base business require effort and planning but when done correctly can prove to be very lucrative and rewarding for you. And it is realistic that you can earn very good income from the convenience of your home if you are willing to invest the effort and time and discipline yourself.

The success of your home based business is going to be based on consistent well planned effort and a well planned marketing and advertising plan. To be a success with a home based business you must be willing to invest the needed time to constantly work to grow your business. These are key elements to having a successful home business.

It is also recommended that you invest the time to learn as much as you can about the type of home business you want to begin. It is also highly recommended that you research to discover what is called a niche market, which is a targeted portion of a particular market. Focusing on a niche market simply means addressing a need for a product or service that is not being addressed by mainstream providers. You can think of a niche market as a narrowly defined group of potential customers.

For example, instead of offering cleaning services, a business might establish a niche market by specializing in blind cleaning services. One great advantage of finding a niche market is the great advantage of being alone in the market you chose, other small businesses may not be aware of your particular niche market, and large businesses won’t want to bother with it.

The goal of niche marketing is to find or develop a market niche that has customers who are accessible, growing fast enough and that aren’t already owned by an established vendor already. You should also develop a structured time and consistent work schedule to manage and grow your business. You should maintain the same professional approach as with any job. Set a strict business schedule that works for you and stick to it.

Also like any other business you will need to learn how to market and advertise your business effectively. In fact this will be one of the most important aspects of running your home business, advertising your business lets others know of your business or service you provide. Without this important aspect others will not know you exist,you will also need to learn the techniques needed to be able to convert your visitors into buying customers. We recommend establishing good relationships with your customers as you provide solutions to their needs as well.

Another important aspect of running a home business is establishing trust with your customers. If you want your customers to trust you then you must always conduct yourself with integrity when doing business. If you maintain your integrity you will win the trust of your customers and they will begin to buy your product or service. Once this occurs your customers will begin to help you be spreading the word about your business and the good product and service you provide.

To grow and develop a successful home based business requires you to research the market you want to enter, disciplined consistent effort, and patience. Once you achieve your success goals though it is well worth it. We recommend setting realistic goals that are attainable as you start out on your success from home goal.

Why Join an Affordable Online Business?

There are many reasons why you should join an affordable online business and of course the most obvious reason is that it is an affordable business. Many people make the mistake to judge and think that just because the business is affordable it is not going to work and is not valuable enough.

These affordable businesses actually make it their priority to offer as much value as possible for a great affordable price to as many people as possible. Of course there are a lot of people in the Internet who are looking for the next high tier program that charges thousands upon thousands just so they can make a high commission on it.

The reason you should join an affordable online business is because not only will you be saving money in maintaining the business but also you will have a lot of value to offer others for a great price. You will soon begin to realize that all the money that would’ve gone into a business charging $1000 will be able to go into investing in order to promote your business. This is a good thing because the promotion of your business is what produces results and increases your chances of becoming successful.

Of course there a lot of people that don’t see it this way but since you are looking to join an affordable online business you’re making a great decision. The link in the resource box below will fully provide you with additional information that will be beneficial for you to know.