Personal Development for Smart People Forums - View Single Post - How To Invest In Index Funds Without Much Money?

FXTraderWill · 11-09-2006, 05:27 AM

It's easy, just buy a stock that replicates an index.

In the case of the Vanguard 500 Index, which replicates the S&P 500, the security you want to buy is SPY. SPY trades at ~1/10th the value of the S&P Index (right now ~$138/share) and trades just like a normal stock, so it should cost you at most $10 to place your order. Its performance will mimick that of the Vanguard 500 fund - hell, it might even do a little better since the Vanguard fund will take a percentage of your assets as a management fee.

For the Russel 2000 Index, you want IWM.

Go to bigcharts.com and lookup SPY just to see what I mean. Then compare it to SPX (SPX you can't actually buy, it's just the index itself, the closest you can come is with S&P futures, the Vanguard fund, or SPY).

11-09-2006, 05:27 AM	#4 (permalink)
FXTraderWill Junior Member Join Date: Nov 2006 Posts: 22	It's easy, just buy a stock that replicates an index. In the case of the Vanguard 500 Index, which replicates the S&P 500, the security you want to buy is SPY. SPY trades at ~1/10th the value of the S&P Index (right now ~$138/share) and trades just like a normal stock, so it should cost you at most $10 to place your order. Its performance will mimick that of the Vanguard 500 fund - hell, it might even do a little better since the Vanguard fund will take a percentage of your assets as a management fee. For the Russel 2000 Index, you want IWM. Go to bigcharts.com and lookup SPY just to see what I mean. Then compare it to SPX (SPX you can't actually buy, it's just the index itself, the closest you can come is with S&P futures, the Vanguard fund, or SPY).