The VFINX mentioned above has low expenses than any other fund because it tracks the s&P 500 index, which means unless a change occurs tot he index, the fund doesn;t need to be modified..i.e. no real management. There are ETF and Spiders that do the same thing with no expenses at all, so some could ask why not invest in those instead of VFINX?

However, there are some funds that do charge 3% in expenses, and some say you get what you pay for. There was a fund caled the Quantum fund run in the 70s and 80s by a guy named Geroge Soros (for those inetrested in reading material, look him up) and he charged high expenses. However, his fund retruned an average of 32% per year from 1969 - 2000, meaning if you put in 1k in 1969, you'd have 4 million today.

It goes to show that the money manager is worth something if you are choosing a mutual fund that picks stocks.

Soros was like Michael Jordan. Chances of finding another guy like him are a million to one.

Chances of finding a mutual fund manager with an activly manged fund that beats the SP500 over the long term are very low.

Vanguard's funds have the lowest expenses because that's what they've always done and they're damn good at it. Other companies have index mutual funds that track the S&P 500, just like Vanguard, but they always have higher expenses. I read an article once about how they do it. Basically it comes down to having the entire corporate culture be about saving money for their customers, more than selling to customers. They figure the product will sell itself.

Have you ever seen a TV commercial for Vanguard? Me neither. T. Rowe Price is one of their competitors, and I see their ads on TV all the time. Ditto Fidelity. And others. Money not spent on commercials = money that stays in your account.

I don't agree that the chances are all that low of finding a mutual fund manager who can beat the S&P over the long term. But the chances are certainly much less than 50%. So you're gambling with a -EV if you take that approach, unless you have some inside knowledge or something.

Low cost, simple, and diversified portfolio construction is key to long-term financial success. Finding an actively managed fund that can beat the market varies in difficulty depending on time range. It is not very difficult to find an actively managed fund that has or can beat the market over 3 years. It is much more difficult to find a fund that beats the market over 10 years. It is extremely difficult to find an activley-managed fund that can consistently beat the market over 20 years.

The longer your investment time span, the more heavily indexed you should be.

"By periodically investing in an index fund...the know-nothing investor can actually outperform most investment professionals. Paradoxically, when 'dumb' money acknowledges its limitations, it ceases to be dumb."
- Warren Buffet

Vanguard is one of the best fund companies. Utilizing total market indexes, such as the Vanguard Total Stock Market and Total International Stock Market Index, a simple and diversified portfolio can be constructed by the "know-nothing investor" that can outperform most other portfolios over the long run.

For beginning investors, or people who cannot meet the 3k minimums to construct an appropriate portfolio, utilize the target retirement funds. For example if you have not funded your IRA, make a 4K contribution into one of the retirement funds that matches the year you wish to retire. Continue building this fund until assets have grown enough to create a portfolio of multiple funds that you can adjust. This is another hands off investment, passive method.

Another important aspect of investing is to stay the coarse. Once you chose a strategy stick with it. If tech stocks are doing extremely well, do not move all of your portfolio into tech. Stay diversified and stay the coarse.

Great Speech by John Bogle, Founder of Vanguard

Vangaurd Diehards Forum, Great Source for Investment Advice Utilizing Vanguard Products


Sample Asset Allocations and Portfolios

Wow...thanks for the great post.

I read the first page of the thread and I found it very interesting.

I want to refer to kenny's point about not investing in anything other than poker because it is almost impossible to get a better ROI at any other activity if you are a consistent winner. I really believe in that BUT, there are other factors.

Most players dont move up according to BR and winrate considerations. Most people(specially solid winners) move up when they feel it s the right time, and that happens for most of them when the they will be playing overbankrolled. If that is the point, I really believe one should invest in something else and get some extra money from it.

I did something that hasnt the highest EV. My bankroll was at 5400USD 4 weeks ago. I was burned-out. I decided to spent some money and invest other. Right now, I only have 800left to play because I invest almost 4K in something with a great ROI, but not as much as poker. Now I am a tomato grower . This situation we found a lot in the poker tables: we change some EV for less variance (peace of mind). That is why I did it.

Why small investors are not considering that kind of activities (agriculture) in the USA? I've heard you can have absurdly high ROI plus some great benefits given by the goverment if you are into agriculture in the States. Is that right?

I don't think many people consider agriculture a great investment in the states. It's certainly never been on my radar AT ALL. I know that big farmers get subsidies and stuff from the government, but if I took a few thousand bucks and planted a few acres ... well, I just don't see making any money that way at all.

EDIT: not to say it's impossible, I'd like to hear more, but I'm skeptical....

I have been offline for a few weeks, that is why I havent responded.

I got into it because a friend of mine was invited to invest by another friend of us. He invested about $4KUSD and 4 month later he was selling the production for over $17K. That was ABSURD! and I decided I had to find out about the business.

I went to the agriculture ministry here and also visited a few big producers and found out that the cost per Ha was 10529.20USD/Ha and the avg productivity was 136,000pounds/Ha (for the most productive variety in open field growing - Seminis Pik Ripe or Tyciano).

Now the most unstable variable in this equation was the price you were going to sell the production. I found on the ministry that the avg price was 0.16USD/pound, and that gives a return of 21760USD/Ha in just a bit less than 4 month!! I was looking for the catch because it looked too good to be true, and the only catch was that it is not an easy job. These plants are hosts of the worst parasites and their attack is nonstop. Also the personnel is terrible. I always remember a quote from my teacher in the Human Resource management class. He said something like: "If you think personnel qualification is expensive, try with ignorance..." well, illiteracy in rural areas of my poor dear country is above 33%.

Another catch is the volatility in prices. Last november the prices averaged 0.34USD/pound, December was at 0.10USD/pound. and january was at 0.25. February was at 0.12, march 0.7 and april is at 0.13USD/pound.

In my experience so far I think the costs are slightly higher than 10529USD/Ha but not really much to give you a bad ROI. I think it should be near 12000USD/Ha.

The 5 pound production per plant seems easily achieveable with the proper varieties.

I will keep you posted on the results. I will start selling this week and things are looking good.