You've saved your money, taken the time to educate yourself about mutual funds and you have decided that now is the time to take the plunge and invest into an Index Fund. There are so many Index Funds out there and if they all mirror the S&P 500 Index you might think, "What is the difference between any of them?"
In some of the other articles on MsFiscallyFit.com, we have mentioned some of the things to take into consideration when purchasing a mutual fund such as: variety of fund family, sales loads and operating expenses. When considering all of these factors, one particular Index Fund comes to mind, the Vanguard 500 Index Fund (symbol: VFINX, click here to download a prospectus or request one by mail, or call Vanguard at 1-800-871-3879).
VFINX is in the Vanguard Family of Funds which has a very large selection of mutual funds in many different investment vehicles spanning from Index type funds through money market and bond funds. Investing within Vanguard allows you the ability to change your mutual fund investment without having to open new accounts with other companies to find the type of fund you want. Another advantage is that you will have all your Vanguard accounts combined on one statement rather than receiving different statements from many companies (Who needs extra paperwork, right?). The VFINX has no sales load and the operating fees are one of the lowest among all mutual funds.
The return of VFINX has averaged over 18% for the last ten years. Add to this the low minimum initial investment ($3,000 for regular account, $500 for IRA account) makes this Index Fund a very attractive investment.
If you purchase the VFINX from a broker, it is possible that you will pay the broker's fee to process your purchase even though Vanguard does not have a sales load. Check with your broker to see if you will be charged a commission or avoid fees by purchasing the VFINX directly from Vanguard.
Vanguard 500 Index Fund
Symbol
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VFINX
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Phone Number
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(800) 871-3879
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Web Site
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www.vanguard.com
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Minimum Investment (Regular acct / IRA acct)
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$3,000 / $500
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Load
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None
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Expense Ratio
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0.18% (very low)
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Redemption Fee (if you sell within 12 months)
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none
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Year to date return (as of 12/31/99)
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21.04%
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Average annual 5 year return (as of 12/31/99 )
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28.46%
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(Source: www.vanguard.com – accuracy of this information is not guaranteed)
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