General Stock Investment Strategies/Vanguard…VTSMX???

Advertisement


Question
Good morning,

I am presently retired with a stable income.  That said, I have a bit of extra cash not accruing any interest and am considering a Vanguard mutual fund…VTSMX.  My time horizon for this fund is 5-10 years…and I'm moderate to aggressive in terms of risk.

It will not be sheltered in any retirement tax deferred plan…and simply subject to taxes.

It is money I can afford to risk in the stock market which is why I'm leaning toward the total market index versus a SP500 Index fund.

Any thoughts whatsoever will be appreciated.

Thank you,

Ron

Answer
Hi Ron,

I can comment on that fund but keep in mind that I do not provide investment advice specific to the needs of any individual.  Warren Buffett says that the average investor should invest in Index funds and I agree with him.  The Vanguard Total Stock Market Index Fund has very low expenses, is tax efficient, highly diversified and studies have shown that Index funds outperform actively managed funds over long periods of time.  There is not that much of a difference between this fund and an S&P 500 Index Fund.  This fund will do better than the S&P 500 Index fund when small and mid caps stocks are performing well and underperform when the opposite is true. Also, keep in mind these comments do not reflect whether now is a good time to invest.

I hope this helps

Best,
Michael Weiss  

General Stock Investment Strategies

All Answers


Answers by Expert:


Ask Experts

Volunteer


Michael Weiss, CFA

Expertise

I can answer most questions about stock investment strategies, especially those related to value and growth

Experience

I am the owner of Series 7 Exam Tutor , a financial tutoring business that provides personalized tutoring for the Series 7 Exam, the Series 6 Exam ,the Series 65 Exam, the Series 66 Exam, the Series 63 Exam and the Series 24 Exam . I also offer tutoring for finance courses. For additional information, please visit, Finance Exam Tutor. Prior to launching Series 7 Exam Tutor, I worked in investments for 20 years with the majority of this time focused on investment analysis and portfolio management. I have worked for large companies such as Merrill Lynch and Evergreen Investments and have also worked for smaller firms as well. Throughout my career, I have sought to mentor younger colleagues whenever possible, especially those enrolled in the CFA program. I completed the CFA program in 2002 after passing all three exams on the first try. I also passed the Series 7 Exam with a score of 94%. For additional information about me, you can visit the links below:
http://www.series7examtutor.com
http://www.financeexamtutor.com
http://www.series6examtutor.com
http://www.series65examtutor.com
http://www.series66examtutor.com
http://www.series63examtutor.com
http://www.series7training.net
http://www.series24examtutor.com


Organizations
CFA Institute and CFA Society of Philadelphia

Publications
Investopedia

Education/Credentials
M.B.A. in Finance & Investments from the Zicklin School of Business at Baruch College and a B.A. in Finance & Economics from the City University of New York Baccalaureate Program.

©2016 About.com. All rights reserved.