Pick the right index fund — S&P 500 trackers, total market funds, and exactly when to use each one.
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70 articles in this category
Index funds went from heresy to default in 50 years. The next era is about fees near zero, passive surpassing active, and direct indexing letting you own the index stock-by-stock. Here's the trajectory.
Index investing is intellectually easy and emotionally hard. The strategy is two lines long; the difficulty is sitting still while your balance falls 30%. Here's the behavioral side nobody warns you about.
In your 40s, retirement stops being abstract. The portfolio stays growth-oriented but begins shifting: you add a real bond allocation and start caring about sequence-of-returns risk for the first time.
In your 30s you still have decades to compound, so the portfolio stays stock-heavy. What changes is the focus: broaden internationally, raise contributions as income grows, and let automation carry you.
Your 20s give you something no later decade can: 40-plus years for compounding to work. That long runway is the case for an aggressive, mostly-stock index portfolio — here's a durable way to build one.
You don't need to pick stocks or time the market to start. A brokerage account, one broad index fund, and an automatic monthly contribution is a complete beginning — here's exactly how to set it up.
Index funds buy the market as it is. Factor funds tilt toward traits — value, small size, momentum, quality — that academics link to higher long-run returns. It's a middle ground between passive and active.
Socially responsible index funds let you track a broad market while screening out companies you'd rather not own. The catch: screening means slightly higher fees, tracking deviation, and fuzzy definitions of "responsible."
Buying the S&P 500 feels diversified, but cap-weighting means the largest companies dominate. Today the top handful of mega-cap tech names make up a large slice of the index — here's why that matters.
The efficient market hypothesis explains why index funds work — not because markets are perfect, but because they're hard enough to beat that the costs of trying rarely pay off.
The claim that passive investing distorts prices and inflates a bubble is popular and partly reasonable. But the data on who actually sets prices tells a more measured story. Here's both sides.
Index changes are announced in advance, so traders can buy the additions before the funds do and pocket the bump. It's a real cost — but a tiny one for broad index investors. Here's the reality.
An index is a list, and lists get revised. Reconstitution is the scheduled day stocks enter and leave — and for the Russell indexes, that one June day is among the highest-volume of the year.
VTI and ITOT are both 'total U.S. market' funds, yet they track different indexes built by different providers. The benchmark a fund chooses quietly decides what you actually own.
Some index funds own every single stock in their index. Others own a carefully chosen subset that behaves like the whole. The choice depends on the index, and it affects how tightly the fund tracks.
Your index fund is moonlighting. It lends the shares it holds to short-sellers for a fee, and that income can shrink the gap between the fund and its index. Here's the mechanics and the catch.
Two funds tracking the same index can lag it by different amounts, and one can be more predictable than the other. Tracking difference and tracking error measure these two distinct things.
The fee feels like a rounding error: 0.10% versus 0.03%. But it's charged every year on your whole balance, and the drag compounds. Here's what that gap really costs over decades.
Owning five funds feels diversified until you find Apple and Microsoft sitting in all of them. Here's how holdings overlap quietly concentrates a portfolio you thought was spread out.
Correlation runs from -1 to +1, and two S&P 500 funds sit at roughly +0.99. Real diversification comes from pairing assets that don't move in lockstep — here's how to read the numbers.
A target-date fund is a three-fund portfolio that rebalances itself and grows more conservative on a schedule. You give up a little control and a few basis points for never touching it again.
A robo-advisor is mostly a wrapper that automates things you could do yourself with index funds. The question is whether ~0.25% a year is a fair price for never having to think about it.
Spending down a portfolio is harder than building one. The 4% rule is a useful anchor, but the real challenge is surviving a bad market in your first retirement years.
Adding a fourth fund to the Boglehead classic is tempting, but the candidate matters. International bonds and REITs do very different things — and one of them may already be in your other funds.
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