Vanguard: A Solid Mutual Fund Company
by
Larry Wiener
Two or three
years ago a friend of mine insisted that no one should be in a mutual fund
because you could do better trading stocks on your own. Now that same friend
will have nothing to do with stocks because you can’t make any money in them.
More...
With all the confusion out
there about stocks, now more than ever is the time to be prudent and sensible
about your investments. That said, you can do a lot worse than Vanguard as a
place to put your money.
Vanguard is a diversified mutual fund family with a great variety of
funds–stocks, bonds, balanced, overseas, and blends of all of the above. The
family has a great website and extremely helpful phone representatives. I have a
large portion of my own money in Vanguard funds. Here are some of the family’s
strengths:
• Low costs Every mutual fund company charges in one way or another.
Vanguard charges less than most. Being a mutually owned company, it is not
necessary for Vanguard to pay stockholders. Vanguard tends to trade less
frequently than some fund families which keeps costs down. Additionally, because
Vanguard is not available 24/7 for every service, you don’t have to pay in
lower returns for not being able to speak to a retirement specialist at 2 AM on
Christmas morning.
• A wide variety of funds While not the largest fund family (that honor
belongs to Fidelity), Vanguard does have a very large variety of funds. You can
invest in one sector or in the entire market. You can get a socially responsible
fund or one that invests in other Vanguard funds. You can build a diversified
portfolio easily.
• Many index funds Many investors like index funds because they charge
such low fees. With index funds, you don’t pay a fund manager or management
team to analyze stocks. Instead, the fund merely invests in an index.
• Many excellent income funds Vanguard is a great fund family if you
are investing for income with bonds and money market funds. Their fees are low
and returns high compared to peers. Their money market fund allows you to write
checks for $250, a lot less than some.
• A great deal of assistance If you are one who can use a certain
amount of hand holding through the process of selecting an investment, Vanguard
may be the fund family for you.
Vanguard’s
website includes a Plain Talk library on a variety of fund-related topics as
well as news articles and other helps. Phone representatives and knowledgeable
and courteous.
Vanguard is not for every investor. They have higher minimums ($3000 for
non-retirement and $1000 for retirement) than some families do. They are not
interested in customers who want to trade funds regularly and engage in market
timing. They are not available to every investor’s 401(k) or 403(b).
If you are looking for a solid mutual fund company that will manage your
investments responsibly while you have a life, however, you can do quite well
with Vanguard.
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Copyright 2002 by
Larry Wiener, author of The Black
Belt Shopper's Guide
