Indexing for Profit

Physician's Money Digest, February15 2005, Volume 12, Issue 3


Index mutual funds may be dull, butmillions of investors apparently likedull. The largest mutual fund in thenation is Vanguard's 500 Index fund,with more than $100 billion in totalassets. Investing in an index fund meansyou'll never feel the rush of beating theS&P 500 by several points, but you'llnever lag the market by a bundle, either.In fact, because of the low expense ratiosfor many index funds, you're likely tooutpace the majority of actively managedlarge cap funds over time. Althoughall index funds may look alike, it pays toshop for a cheapskate fund. The averageindex fund charges 0.82%, comparedwith Vanguard's skinflint 0.18%. Overthe long haul, that seemingly small differencein expenses can make a differenceof thousands of dollars in your nest egg.