Ask Terry Questions Vanguard Index Funds

Vanguard Index Funds

By Terry Savage on August 01, 2015 | Investments

I have $60K to invest and was told about the Vanguard Index Funds. I am 55 years old and plan on not using any of it for 5-10 years. Would you suggest the 60% stocks/40% bonds fund?

Terry Says:  First, it’s tough to recommend without knowing your entire financial picture, including what other savings you have, if you have debt, and your goals for retirement.  Vanguard is a great place to invest because it is so low-cost.  They also offer a financial advisory service — free — for those who have over $50,000 to invest.

But I will suggest that you first understand that you can lose as much money in bonds, and bond funds, as in stocks.  When interest rates rise, bond prices FALL.  (Who wants an old 3% bond, if rates rise sharply and they can get a new 5% bond???  You’ll get your bond investment back at maturity, but until then you’ll have to settle for the lower 3% income.)

I would suggest using an equity-income fund, or a balanced fund –and letting the fund manager make those investment decisions for you.  But only after you see how this investment fits into your overall financial plan.



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