About Kenneth W. James, CFA Expertise Past President, Denver Society of Security Analysts & President, Greenwood
Investment Management, Inc., frequent writer and speaker, often quoted in
the financial press.
Experience Chartered Financial Analyst, CFA designation earned 1990, Past president of the Denver Society of Security Analysts. Professional portfolio manager to high-net worth, family trusts, foundations, endowments.
Question Hello,
Thank you first of all for taking my question.
I have some money that I have set aside that I wanted to invest for the long term(10 yrs), in an us stock index fund. I am debating weather or not I should open an account with a no-load family such as Vanguard or simply buy such a no-load index fund through my bank, which I have all my accounts (checking, saving, credit card etc) with. The reason I have been considering buying mutual funds through my bank's brokerage is simply because I like to keep things simple and not have accounts scattered here and there.
However, I do not know the pros and cons of this and I'm not sure if I'd be better off investing directly through the mutual fund company. I would like your opinion on this.
Thank you,
atam
Answer There is no way your bank can offer an index fund as cheaply as Vanguard. You will pay heavily for your simplicity wishes. Even with Vanguard, you will end up paying taxes on your investment, since an index mutual fund has turnover which is a taxable event. You need more education before you can make a decision. Consult ishares.com website, and learn how you can invest without taxable distributions from turnover and at a low price, even lower than vanguard in many cases. They have many broad indexes you can invest in, but you must do more study and exploration first. Don't even consider the bank.
KWJ
