Is investing in Vanguard's 500 Index (VFINX) worth it?

**jpg7n16** · 01-05-2011, 01:05 PM

I think it's odd that you acknowledge 2009 being higher because of 08-09, but you discount the effect of the drop in 08-09 from the 10 year average.

VFINX is just an S&P Index. It tracks the S&P. And the S&P is the standard that all other mutual funds try to beat (some do, most don't). It's a very stable fund, with a good long term growth record. And it also pays out dividends (around 1.7% this year from dividends alone).

Unless you're planning to retire in 10 years, using the previous 10 year record isn't helpful.

Although I could even argue that it's supposed to go up about 7-10% a year, so it's well under where it should be. So you should buy low. But that's the optomist in me

It is impossible to predict where it will be 10 years from now.

To paraphrase Warren Buffett: as long as you are buying stock, you want the prices to go as low as possible. So if the S&P fell another 50%, you should be thrilled, because you're young and will be able to acquire a larger position at 1/2 the price.

**creditcardfree** · 01-05-2011, 06:50 PM

We have had a good portion of our retirement in the S&P 500 at Vanguard for the last ten years and yes...not so great, but if I didn't invest at all I would have had $0, instead my husband and I have 6 figures + invested in the stock market.

Why not start with the S&P 500 at it's lower price and spend some more time looking around. You can always move the money. It tax free if it stays in a retirement account.

**snafu** · 01-06-2011, 12:30 AM

It's a good starting point, low entry amount and you can make automatic monthly deposits. Over time you will build a substantial amount, learn about effective investment techniques and easily move to other products if you like.

**radionightster** · 01-06-2011, 12:47 AM

Originally posted by Coronet View Post

I've been told that people as young as me should be looking for more risk in their investments and invest more in stocks. I have been looking at Vanguard's VFINX (500 Index), but I fail to see why this is considered such great advice. The average return since inception is 10.62%, but if you look at their 10 year return it's only 1.31%! Last year did well with a return of 14.91%, but I believe that's skewed due to the 2008-2009 being so awful.

My question is does it make any sense to invest in this seeing as the 10 year return was so wild? I know no one can predict the market necessarily, but I just don't know how I feel about this. Advice appreciated!

Take a vist over to bogleheads (dot) org... They are the investment pros. I've gotten a mountain of incredible advice from them.

**Coronet** · 01-06-2011, 05:43 AM

Thanks for all the suggestions guys.

I'll take a look at bogleheads.

Is investing in Vanguard's 500 Index (VFINX) worth it?