Beginner Investing/S&P vs. AGG

Advertisement


Question
Dear Dr. Beauchamp,

I am a 18-year old boy who would like to invest some of my savings in the market for future use when I am out of college. As of right now I have about $1,400 invested in the S&P index fund and have made about $100 since I invested it about 2 years ago. Recently, I have been contemplating selling those shares and instead investing in the bond fund AGG. While the year to date and long term yields of the S&P are much higher, AGG gives out nearly twice the dividend! If I would be considering using this money in about 5 years when I leave college, which of these funds, or any other options, would be the best decision for me? Thank you very much for your time!

Answer
I think you should leave the money in stock equity funds for your time horizon. I see bond funds not doing well over the next five years, since interest rates will continue to go up. You might explore moving the money over to their international stock fund, since most markets show better returns in the future (in my opinion). Keep using the same group of mutual funds, and stay with one group to keep the costs of transfer down.

Dr. Joseph de Beauchamp

Beginner Investing

All Answers


Answers by Expert:


Ask Experts

Volunteer


Dr. Joseph de Beauchamp

Expertise

I`ve been teaching MBA students around the world for the past 15 years. I have covered over 50 stock markets and published on over 2000 public companies. I review and check on nearly 6000 financial reports a year. I would be glad to help out with questions.

Experience


Past/Present Clients
Over 2000 public companies.

©2012 About.com, a part of The New York Times Company. All rights reserved.