Hey Thanks everyone for the responses! Those were the exact articles I was looking for. I kept going through the list of all Mr. Money Mustache's posts but couldn't find the correct topic.
A quick question. When you say low cost Index fund, I'm assuming you mean no-load, minimal fees, and a low expense ratio. I was wondering, what would you consider a low expense ratio, as I've soon ratios going all over the board!
Your description might fit many other mutual funds other than index funds. What we all mean when we say low cost index funds is a fund that allows for broad market exposure, low operating expenses and low portfolio turnover - an
index of available stocks, rolled into a specific mutual fund (or ETF) and specifically called an INDEX fund. No load fund/low expense ratio/fees should be a given. Where most mutual funds out there might have as little as 10-100 individual companies in its makeup, an index fund will hold hundreds, even thousands of different companies.
Index funds are the definition of "diversification."
A great example is Vanguard's Total Stock Market Index Fund Admiral Shares (VTSAX).
https://personal.vanguard.com/us/funds/snapshot?FundId=0585&FundIntExt=INTFrom this mutual fund's description:
Created in 1992, Vanguard Total Stock Market Index Fund is designed to provide investors with exposure to the entire U.S. equity market, including small-, mid-, and large-cap growth and value stocks. The fund’s key attributes are its low costs, broad diversification, and the potential for tax efficiency. Investors looking for a low-cost way to gain broad exposure to the U.S. stock market who are willing to accept the volatility that comes with stock market investing may wish to consider this fund as either a core equity holding or your only domestic stock fund.Another decent example is Fidelity's Spartan Total Market Index Fund - Advantage Class (FSTVX).
https://fundresearch.fidelity.com/mutual-funds/summary/315911800What is a low expense ratio? Well, Vanguard's VTSAX and Fido's FSTVX are 0.05% so they're the benchmark. I personally consider anything over 0.50% a very high expense ratio because I invest pretty much only in index funds.