Advice for young people
Hi Terry. I’ve learned a lot by listening to you on the John Williams show. My daughter is 25 years old and works as an Admin at a community college. She lives at home. She invested the full $7,000 into a Roth IRA last year and plans to do the same this year. She is careful when it comes to investing so we have primarily been investing in the Vanguard Treasury Money Market fund which has been earning around 5% up until recently. I have been talking to her about investing in equity mutual funds given her age. As the market is really high now, do you think it’s better to invest in a Vanguard S&P 500 index fund or do you think it is too overweighted with those 7 or 8 tech stocks? Or do you think a fund like the S&P 500 Value Index fund which has a lower concentration of tech might be smarter?
Thank you.
Terry Says
AT her age, I think either of those two funds would be a better long-term investment than a money market fund. She has time to ride out the ups and downs of the market. She needs to understand the importance of sticking with those funds for many years.
Now, maybe she wants to move about $500 from the MM fund into either fund every month, automatically, regardless of what the market does. That’s called dollar-cost-averaging – so she won’t be upset if she puts some in at the top!
