Author Topic: New to investing. Index funds for savings?  (Read 2434 times)

GhostRider103

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New to investing. Index funds for savings?
« on: August 24, 2015, 06:49:41 PM »
I'm very new to the investing world and am seeking some help on where to start investing.

I have some cash set aside that I would like to be growing instead of letting it just sit there. I would also like to be able to increase the amount monthly.

I've been looking into vanguard index funds but am unsure if it is the right way to go. I should mention i do plan on buying a house within the next 2 years.

Is index funds a good option? Is there something better for short term? Also, how accessible would my funds be in a vanguard index fund?

fb132

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Re: New to investing. Index funds for savings?
« Reply #1 on: August 24, 2015, 06:57:08 PM »
I'm very new to the investing world and am seeking some help on where to start investing.

I have some cash set aside that I would like to be growing instead of letting it just sit there. I would also like to be able to increase the amount monthly.

I've been looking into vanguard index funds but am unsure if it is the right way to go. I should mention i do plan on buying a house within the next 2 years.

Is index funds a good option? Is there something better for short term? Also, how accessible would my funds be in a vanguard index fund?
Just buy Vanguard's total stock market (if you are from the US) or the canadian couch potato portfolio if you are canadian, that should be enough....and no you shouldn't invest if your money is to buy a house in 2 years. If you do, you may risk losing money short term. You are better off in a savings account or money market. At best you could put it in some bonds or treasury.

GGNoob

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Re: New to investing. Index funds for savings?
« Reply #2 on: August 24, 2015, 07:11:53 PM »
Start here for some information on investing: http://www.bogleheads.org/wiki/Main_Page

I prefer to have our savings invested in index funds instead of sitting in a savings account. However, the only big thing we are saving for is retirement. If you plan to buy a house within the next few years, you're probably better off with that money in a "high-yield" online savings account.

Logan

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Re: New to investing. Index funds for savings?
« Reply #3 on: August 24, 2015, 07:23:03 PM »
Do not invest any funds you need to use within the next 5 years. The market is too volatile and unpredictable in the short term to count on the money to be there in full when you need it.

What happens if you put (for example) 50K that you're saving for a downpayment on a house into the market, and two years from now find the perfect house, but there's a correction/crash and that 50K is now only 25K? You're not going to want to wait the months/years for it to recover - you will want the full 50K right then, right?

Savings accounts are for short term.
« Last Edit: August 25, 2015, 12:12:10 PM by Frankies Girl »

FLA

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Re: New to investing. Index funds for savings?
« Reply #4 on: August 24, 2015, 07:31:40 PM »
For years I considered my Roth principle my EF, college help, etc because the fund could grow, but after 5 yrs you can take out the principle for any reason, I did use Vanguard Index funds.  So this won't work because you do not have 5 yrs and I, too, would not take risk with money you need in 2 yrs. 

I've never done this, but what about putting it in CDs?  I've read in finance books that explained how to ladder them time wise but honestly I do not recall because I never plan to use those.  At least you'd get a tiny return and be totally safe.

If you are getting interested in investing, you might want to try one of John Bogle's books, he started Vanguard.

tallen

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Re: New to investing. Index funds for savings?
« Reply #5 on: August 25, 2015, 02:37:20 AM »
I'd look into the 5% interest savings accounts that  come with some of the "prepaid" cards (the type marketed to those that cannot get traditional bank accounts). I'm saving for a rental property and that's where I'm parking my cash for the time being.

The prepaid cards they're linked to are fee heavy, but as long as you don't use the cards for purchases and only to get the savings accounts you can avoid paying any fees.

Here's a couple links if you want more info on them:
http://www.doctorofcredit.com/guide-to-5-interest-prepaidsavings-accounts/
http://www.fatwallet.com/forums/finance/1432026/