& BARB RECOMMENDS LINK ROUND UP!
John responded to a recent article of mine in American Media Marketplace entitled Want to Get Rich From the Lottery? Start a Savings Plan Instead with this comment,
“(Saving) $50 a week for 52 weeks is $2,600, but it still wouldn’t meet the $3,000 minimum initial investment for the Vanguard Total Stock Market Index Fund.”
As a longtime cheerleader of Vanguad low cost Index funds, I WAS TROUBLED BY THAT COMMENT. I immediately called up Vanguard to confirm John’s comment. To my dismay, he is correct, not even with a commitment to automatic monthly contributions can you get around the $3,000 minimum initial investment. That’s way too high!
I frequently recommend getting started with investing, after taking care of these financial basics, by investing in a broad based mutual fund such as the Vanguard Total Stock Market Index Fund (VTSMX).
No more, although the advice still stands, the broad based United States Stock Index Mutual Fund has many clones. I stopped by Charles Schwab to check out their offering in this category.
The Schwab Total Stock Market Index Fund (SWTSX) is a better choice than the Vanguard Total Market Index Fund.
Schwab Total Stock Market Index Fund versus Vanguard Total Stock Market Index Fund
- Description: Seeks to track the total return of the Dow Jones U.S. Total Stock Market IndexSM, which includes all U.S. headquartered equity securities with readily available price data.
- Expense Ratio: Vanguard-0.19%; Schwab-0.09%
- Minimum Initial Investment: Vanguard-$3,000.00; Schwab-$100.00
Clearly, if you are just starting out, a fund with a small minimum required investment is an important consideration. Although a balanced portfolio should include a U.S.A. index fund, a broad based international fund, and some bond exposure, this article focuses solely on the U.S.A. index fund component.
Do not construe this article as a recommendation to buy or sell. Consult your own advisor for specific recommendations to fit your individual situation.
For a quick primer on investing download my FREE eBook 20 Minute Guide to Investing from the top right of this site.
- Short and sweet at Yes I am Cheap; Answers to Common Personal Finance Questions.
- At Yakezie, Sam, the Financial Samurai wrote Believe You Will Succeed, what could be considered a Guide to Life in this article, you must read it!
- Life and My Finances does a wonderful job explaining an important financial concept, gross income. He even throws in some ways to increase it!
- Soldier of Finance has a beautiful website with great advice, and a video too. Get informed and entertained; You Don’t Have That Much Debt, Really?
- Free Personal Finance eBook, a great read by Carol in the Trenches
- One of the best articles on behavioral finance I’ve ever read at Money Crashers.
- Ever wonder about Buying a New vs. Used Car? Money Crashers offers some really good info.
- Ever consider getting a “debt free” college education. Read this guest article by Penny @ The Saved Quarter over at Get Rich Slowly.
- Should We Eliminate the US Postal Service? Ponder this question from Consumerism Commentary. I’ve thought about it myself.
- Want a good laugh? Head over to Millionaire Nurse Blog for some Money Saving Tips along with the humor.
- The College Investor asks, Why do Gas Prices Rise? I had to include this one as I’m a bit obsessed with inflation.
Barbara Friedberg Across the Blogosphere:
- Guest article; Eating Donuts Can Help You Stay on Budget at Len Penzo dot Com.
- Guest article; Want to Get Rich from the Lottery? Start a Savings Plan Instead, at Making Money Blog at American Media Marketplace.
- Interviewed by Tim at FAITH AND FINANCE.
- Totally Money Blog Carnival at Money Mamba
- Invest it Wisely
- Budgeting in the Fun Stuff
- Bucksome Boomer
Chime in please; what other investment companies have LOW INITIAL MINIMUM INVESTMENT THRESHOLDS?
image credit; the skateboarding maniac