Quote:
Originally Posted by banana4678
Elementary ?'s
Quote:
What is diff bw vanguard vs S&P index fund?
The S&P 500 in an index of stocks, like the dow Jones industrial average (referred to as "the dow") . You can't actually buy the S&P itself, you are buying an fund that mirrors it. There are multiple funds that do, but they have very slight differences like expense ratio. Most people just say they bought the S&P if they invest in something like the vanguard 500 index fund. It's not technically correct but that's how the terms are used.
Quote:
Friend told me he put 20k in vanguard 5yrs ago. Has 60k now? Can I set up either myself? Online?
Yes, the index shot up dramatically in the last 7 years. Yes, he made money. Yes, you can set yourself up online at vanguard, or any other brokerage and just buy the vanguard 500 etf. If you prefer.
Quote:
Trying to maximize both goals. High Risk on short term. Low risk for long term goal
You are confused here, which is normal because you are totally new to this. You have this exactly backwards. You never want to put your short term money in high risk. You want long term money high risk because it'll have time to recover if it drops in value.
It seems like you have the house situation in your mind and you look at what your friend did and you'd like to make some quick money to make that situation easier on you financially, and your thoughts about retirement are you don't want to "risk" that.
Your thoughts are rational but the understanding is not. It's exactly the opposite. Let me explain.
1. We do not know what stocks will do in the short term (2-5 years)
2. We know that stocks, in general, grow in value over longer stretches of time.
3. Stocks drastically beat other asset classes in growth rates over time.
If we know the above are generally true, then we can see the error in your goals. To retire comfortably you need growth. If we know that a 10+ year time horizon makes it a safe bet to invest in something like an index fund, then you should be investing your retirement money in exactly that. Since we do not know what they will do in the short term your short term goal must be safety. Bonds are safer than stocks, cash is safer than bonds. You currently have money in a money market, which is a cash equivalent, therefore it is very safe. If you need that money for a down payment on a house then you absolutely need safety. Imagine a scenario where you need 60k cash for your down payment in 4 months, and you invest it all into a mutual fund. During those 4 months the mutual fund you bought decreases in value 20%. Now do you understand why safety is so important? You just lost 12k in something that you absolutely needed, and now you can't buy that house because you are short.
Anyway, hope this helps. I just wanted to ensure you don't do anything incredibly risky right now, as you seem to be in the same situation as me, but don't understand what you're about to get yourself into, so I was alarmed when I read your post.