Picking stocks is hard?and you still might not beat throwing darts at the stock pages. Here some easier ways to get yourself an edge.
1. Don?t pay 33% of your money in fees. Mutual fund charges look small, but the cost of paying an extra 1% a year in fees is that you give up 33% of your potential wealth over the course of 40 years. An index fund like Schwab Total Stock Market ?SWTSX -0.42% ?can keep your expenses below 0.1%, compared with over 1% for many stock funds.
2. Mix your own simple plan. Four very low-cost index funds, recommended in the Money 50, deliver all the world?s major markets. (See graphic below.) The more aggressive you are, the more you can tilt toward stocks.
3. Or pick just one fund. You don?t have to be fancy to be an effective investor. A classic balanced mix (about 60% stocks/40% bonds) provides plenty of equities? upside, with less pain during crashes. The Vanguard Wellington ?VWELX -0.3% ?balanced fund has earned an annualized 8% over a decade.
4. Or hire a robo-adviser. Outside of a 401(k), if you want a plan that?s more tailored to you, web-based automated investment services can put you in a mix of low-cost index funds and then rebalance as you go. Betterment and Wealthfront stand out as low-cost options, charging 0.35% of assets or less.
5. Patch the holes in a 401(k). Many workplace plans offer at least an S&P 500 or total stock market index fund as a low cost option for buying U.S. stocks. But if your plan doesn?t offer good choices in other asset classes, such as bonds and foreign stocks, diversify elsewhere. Save enough to get the company match. Then fund an IRA, where you can choose which bond funds or foreign funds to go with.
Read more at?TIME