AboutJohn D Smith, CFP Expertise I can answer detailed questions regarding mutual fund investing, retirement planning, education planning and related financial planning/investment issues. I have a B.S. degree in Financial Planning & Counseling. I am also a Certified Financial Planner practitioner and have performed fee only investment management and financial planning services for the past 11 years.
Expert: John D Smith, CFP Date: 1/24/2005 Subject: index funds a good idea?
Question i hear much of the benefits of index funds for the typical hands-off investor. however, i seem to recall popular author ric edelman advising against them.
what's your opinion? thanks
Answer In my opinion, index funds area great low cost solution to investing. However, the most important decision to first make when investing is your overall allocation (% in stocks, bonds, cash, etc) Once this decision has been made, then I feel it is important to be diversified. On the equity side, I would own large US, small US and international stocks. Index mutual funds are a great way to do this. For more information on index fund and mutual fund investing, I would visit www.vanguard.com. Enter their personal investors section and go to the planning and advice tab. If you want more detailed information on index funds vs actively managed funds, go to www.standardandpoors.com and type in spiva and go to the spiva scorecard under indices. This shows an analysis of how actively managed funds have done vs the indexes or different periods of time.
