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Small investors are fans of index funds

The simplest, lowest-cost way to invest is with funds that aim to track a particular market index. But indexing means accepting the market's return, which many investors hate to do, especially in times when stocks are down. They want stocks or funds that outperform — and hope they can pick them.

We asked

Do you stick to index funds for your stock investing?

The low costs of index funds and ETFs make them the best way for us small investors to invest in stocks and bonds. Anyone who takes time to read and research investments beyond the marketing hype will learn this is true. Pension fund managers dealing with billions use them.

Dan Dixon, New Port Richey

Index funds, especially those offered by Vanguard and Fidelity, provide simplified low-cost diversification with some tax advantages. It's the smart way to invest if you're not smart about the stock market. Never put all your eggs in one basket.

Billy Ball, Pinellas Park

I use strictly index funds. Low-cost index funds have several advantages over active funds: They match market returns, no manager risk, no style drift, tax efficiency, global diversification and no futile performance chasing.

Adrian Nenu, St. Petersburg

We don't do index funds. I'd rather choose special-area funds that may far exceed the overall market (example: T. Rowe Price Media and Telecommunications Fund.)

Eric Rhodes, New Port Richey

I've tried stock index funds in the past and find, as with any investment, that there is no assurance you are guessing right on when to commit money into these funds, what the performance of the overall market or sector will be, or if you will make money or not. I've since stuck to individual equities and municipal bonds.

John McBaine, Indian Shores

I believe financial analysis does reveal individual stocks that will consistently outperform an index. For my personal portfolio, I do the analysis myself; for my retirement portfolio, I let the mutual fund managers do it.

Brian Rink, Tampa

I use index investing as a way to have instant diversity with low expenses, two keys to successful investing.

Kevin Horan, New Port Richey

I continue to keep index funds coupled with a good bond portfolio during good and uncertain times to provide safety of principal.

Paul Dufour, Tampa

I love index funds. I am a die-hard Vanguard player.

Joe Tranagata, Holiday

Next week's question: Will you pay off your mortgage early? What's your strategy?

To ask a question, make a comment or answer the Money Question of the Week, e-mail or write Helen Huntley, P.O. Box 1121, St. Petersburg, FL 33731. Visit her MoneyTalk blog ( for more money information.

Small investors are fans of index funds 06/14/08 [Last modified: Monday, July 28, 2008 9:57am]
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