Better to invest in Vanguard 500 Stock Index Fund or Total Stock Market Index Fund?
Q. I am a young investor interested in investing in a roth IRA and am interested in the Vanguard family. Currently my IRA is with a bank with a very low interest rate. I have researching different funds and like Vanguards no load index funds. Which is better to invest in?? 1. Vanguard 500 Stock Index Fund 2. Vanguard Total Stock Market Index Fund
Asked by Tance G - Mon Mar 9 13:18:44 2009 - - 6 Answers - 0 Comments

A. The question is actually a very interesting question. Here is why. Both indexes are capitalization weighted. What that means to you the investor is that both on a market value basis are going to contain very nearly the same weight of stocks. What I mean by that the top 10 holdings of both will contain exactly the same stocks in almost exactly the same proportions. Even though the total market index contains many more stocks the additional stocks make up a very small portion of the total. The top 10 holding of the 500 index make up 22% of the total but only 18.5% of the Total Market index--not all that much difference. When you compare the returns over the years of the two they again are very similar. The 10 year return for the 500… [cont.]
Answered by muncie birder - Mon Mar 9 15:35:02 2009

Is it a good idea to invest in mutual funds, specifically total stock market index funds?
Q. with all the talk on the news about a possible recession i dont know if its a good idea to invest in mutual funds.
Asked by jonathan.zuniga53 - Sat May 3 19:31:00 2008 - - 7 Answers - 0 Comments

A. The answer "Common Sense" provided is excellent! I would agreee and reiterate: it is always a good time to invest in mutual funds and to do so regularly to take advantage of dollar cost averaging. I have invested in Vanguard for nearly 30 years. They are the low cost leader and provide excellent customer service. There are other companies but check the fees. Vanguard is about 1/5 of most other mutual fund companies and in fact is a "mutual" company. All the shareholders are the owners so you reap the benefits. Also, as CS said: read as much as you can. Vanguard (and I suspect others) have online resources to help educate the investor.
Answered by john carlo - Sat May 3 20:12:53 2008

Could you please explain in simple terms what stock market index/indices mean?
Q. How do they affect the economy if they went up and high? what do they represent?
Asked by lorenz d - Mon Mar 29 21:45:15 2010 - - 2 Answers - 0 Comments

A. A stock market index is just a measure of the entire volume of a particular stock market. An example would be the Dow Jones Industrial Index, which is an index measuring the market for industrial stocks. Stocks are a way for publicly traded companies to attain capital for their operations, and stock markets are just markets in which investors can exchange their money in exchange for stocks which can either increase or decrease in value depending on the demand for their stocks (which is influenced by factors like the activities of the company, their future plans, market conditions, etc.). If an index goes up, it just means that there is more investment going on in the stock market, and vice versa. That is why people look at these… [cont.]
Answered by Justin C - Mon Mar 29 21:55:42 2010

How the stock market index is built?
Q. How the stock market index is built?
Asked by rajiv - Sat Oct 18 01:25:29 2008 - - 2 Answers - 0 Comments

A. This depends which one you are talking about. The ever famous is the Dow Jones Industrial Average 3M Alcoa American Express AT&T Bank of America Boeing Caterpillar Chevron Corporation Citigroup Coca-Cola DuPont ExxonMobil General Electric General Motors Hewlett-Packard Home Depot Intel IBM Johnson & Johnson JPMorgan Chase Kraft Foods McDonald's Merck Microsoft Pfizer Procter & Gamble United Technologies Corporation Verizon Communications Walmart Walt Disney The Dow Jones Wilshire 5000 Total Stock Market Index, as its name implies, represents the stocks of nearly every publicly traded company in the United States including all U.S. stocks traded on the New York Stock Exchange (but not ADRs) and most traded on the NASDAQ and American Stock… [cont.]
Answered by Hussein Obama - Sat Oct 18 01:36:17 2008

At what point (looking at the stock market index) we will know we are at depression?
Q. Now that the market keeps going down like there is no tomorrow... are we going deeper?
Asked by mystery t - Thu Oct 9 15:45:31 2008 - - 2 Answers - 0 Comments

A. Though there is a bit of correlation between the stock market and GDP, I'd imagine the the stock market lags behind when it comes to knowing the state of the economy. For instance, by the end of 2001, and beginning of 2002 that recession had already passed. Yet, if you look at the Dow Jones, it doesn't hit it's lowest point of that time period until the end of 2002, and troughs again in the beginning of 2003. I'd also attribute the major declines in the stock market today because investors are just very shaky in general. People are moving there money to the safest possible investments and leaving the stock market entirely. It may not necessarily be because the economy is that bad. In fact most of the moves are because of fears and… [cont.]
Answered by Michael - Thu Oct 9 16:19:16 2008

What is going on with the stock market!!!? All 3 of my index funds are sinking like crazy...?
Q. I own vnaguard total international stock index, total stock index, & gaaex (alternative energy companies)--- ALL are sinking EVERY day for the past few days--- Im losing 1000s... is it time to pull out or wait it out? I am willing to leave this money alone for 5-10 years --- but all these sharp declines across the board are making me jittery
Asked by marycotter5678 - Fri Jan 18 09:34:26 2008 - - 8 Answers - 0 Comments

A. From the tone of your question, it sounds like you have taken on more risk than you can tolerate. That indicates that you are probably in the wrong investments. If you did not do this when you bought your funds, its time to consider why you should won these investments, and what catalyst will cause you to sell. Each or your funds is reacting to slightly different catalysts. 1;) alternative energy index: This fund will tend to move with the price of crude oil. Crude has fallen back down to the $90 level. Its fairly normal for oil to sink as we approach the end of the heating season, then pick up again when the summer driving/hurricane season starts. If you believe the long term trend for energy demand and oil prices is up, just… [cont.]
Answered by bookbyte - Fri Jan 18 10:21:00 2008

How do I compare the performance of a stock market against a market index?
Q. Like what can I talk about? This is for a report and i got no idea where to start. apart from prices going up and down...
Asked by jenny - Thu Jan 14 06:12:10 2010 - - 4 Answers - 0 Comments

A. If you go to Yahoo Finance Enter the stock symbol in the box, I'm using MRO (Marathon Oil Co) then click on the small chart of MRO on the right, and you get an intraday chart. At the bottom of the chart, expand the chart to one year by clicking on the "1Y" tab To compare this stock against an index (let's use the DJIA or Dow), click on the "Compare" tab and check the DJI (Dow Jones Industrials) box Finally you have your comparison of Marathon Oil against a major stock market index. You can see that they track rather nicely until last December, when MRO began to underperform the market. Since the Dow is up 30% and MRO up only 20%, the conclusion here is that MRO underperformed the market by 10% this year.
Answered by b2fnow - Thu Jan 14 10:33:22 2010

Am I diversified if I invest only in the Vanguard Total Stock Market Index (VTSMX)?
Q. I'm starting taxable brokerage account and wondered if dollar cost averaging into this one index could be an option.
Asked by jeff b - Tue Sep 15 10:08:57 2009 - - 7 Answers - 0 Comments

A. Hi Jeff, Some of the apparent conflicting answers you've received are an outcome of the different assumptions being made by responders. If you read between the lines you can see, for the most part, that you'll get excellent diversification in terms of domestic equities by using the VTSMX fund. There is some argument regarding the cap weighting issue, [you might want to consider some small cap value to augment the large cap bias of VTSMX] but for someone just starting out you could do much worse then VTSMX. Beyond that you'll eventually want to include bonds and cash in the mix. It's widely held that about 90% of the results you get from investing boils down to the stock/bond/cash mix you choose, regardless of which choices of equities… [cont.]
Answered by GeorgieGuy - Wed Sep 16 13:21:22 2009

What does benchmark index in stock market means?
Q. How does the company calculate benchmark index and how do you measure it with your own funds?
Asked by Empty Cup - Tue Oct 14 23:28:21 2008 - - 1 Answers - 0 Comments

A.
Answered by jeff410 - Tue Oct 14 23:34:47 2008

what are the differences between Stock Market Index & Exchange Traded Funds?
Q. Pls Help n Ten Pts be given =) God Bless
Asked by Shaun T - Wed Jan 9 09:11:30 2008 - - 1 Answers - 0 Comments

A. An Index is just a way to keep track of how the entire market is doing. An ETF is an investment vehicle. Its like a share on a basket of stocks. This basket of stocks can either track (ie try to match the performance) an index (SPY tracks the S&P500, QQQ tracks the NAsdaq 100) or just a specific secto (XLE tracks energy)
Answered by traderbobhn - Wed Jan 9 09:18:59 2008

What is the importance of stock market index?
Q. add math
Asked by missred - Sat Jun 19 08:39:00 2010 - - 4 Answers - 0 Comments

A. An index is a way of grouping securities. A, say, health care index will group multiple companies in the health care sector and track them simultaneously according to the definition of that index. The importance is that it enables researchers to draw focused and exchangeable data. If one researcher developed some theory on the health care industry some other researcher may find it to not hold true simply because of how they each define the health care industry, whereas, if the theory was based on the health care industry as measured by a given index then there would be no questions as to the definition of that industry. They also serve as the bases for index funds, which likewise enable investor to focus their funds on a given,… [cont.]
Answered by Joseph - Sat Jun 19 14:01:24 2010

Does a stock price index reflect the actual value of a market index based portfolio?
Q. If I were to buy a portfolio of stocks of, say, $ 10,000, with the same composition and in the same proportions as the S&P500 and, after one year that index had a variation of, say, +15%, would my portfolio be worth exactly $11,500? If not, why?
Asked by Sergio P - Wed Feb 27 15:45:40 2008 - - 3 Answers - 0 Comments

A. No. There are transaction costs. So the difference would be the commissions on the 500 stocks that are in the s&p500, (which would be considerable since you're dividing 500 stocks into only $10,000)--remember there's a price for EACH trade. You'd be better off buying an ETF that replicated the S&P500 index so that you only pay the one commission for the trade. BUT you'd still always underperform the benchmark index because of the transaction costs and imbedded management fees.
Answered by pretzel2222 - Wed Feb 27 15:53:52 2008

how do I calculate the P/E of a Stock market index?
Q. I am aware of how P/E is calculated for a stock , need to understand how it is calculate for the broader market index
Asked by pk - Wed Mar 1 01:11:49 2006 - - 2 Answers - 0 Comments

A. You will need the stock prices at the time divided by the earnings per share and proportioned off by the weight given to them. You will have to know all the P/Es of all the stocks and the weight given to all the stocks. Many ETFs only list the top weighed stocks in their index. Some will give you the names of all their stocks but not how they calculate the weight. They might do it to prevent a true mimic of their index without paying the fees to own the index. Generally they will mention the PE on their own.
Answered by gregory_dittman - Wed Mar 1 01:33:05 2006

What happened to Vanguard Total Stock Market Index Fund today???
Q. I just invested in it 3 days ago and it has been going down... what's happening? What should I do???
Asked by evelinka420 - Fri Jun 8 13:57:21 2007 - - 6 Answers - 0 Comments

A. It looks like it will be up about 1.10% today. You can check this site at ~6:15 PM and they will usually have the day's change listed: https://flagship.vanguard .com/VGApp/hnw/FundsByTyp e As far as what it will do next week, next month or next year I do not know. But you're 23 years old. By the time you retire it will be worth a whole lot more than it is now. Try to stomach the ups and downs and you will be amply rewarded in time.
Answered by Joe - Fri Jun 8 16:01:09 2007

What is a better investment for the ROTH IRA, the S&P Index 500, or the Total Stock Market Index?
Q. They are both under Vanguard.
Asked by shygirl018_2000 - Tue May 2 21:49:14 2006 - - 3 Answers - 0 Comments

A. They'll be about the same. I'm not sure exactly which mutual fund or ETF you're actually comparing. Go with the one with lower fees. I looked up the Vanguard ones. It's .18% and .19% fees. They're both about the same. They're here: and here: You can see that they're almost identical in every respect. Neither one is a bad choice. I have to comment on the things below. Historically, 75% of mutual funds underperform the S&P, after fees because they have to earn an extra 1.5% or so to beat the S&P. So, it's more like getting an A- or a low A, gambling for that A+ and then falling short most of the time. Sure, 25% do better, but it's not always the same 25% every year.
Answered by Arbitrage - Tue May 2 21:51:34 2006

Should I pull my money out of the the stock market?
Q. I currently have $12k invested in vanguard's total stock market index and vanguard's total int'l stock market index (6k in each). It has been slipping steadily and fears continue to rise... would it be wise to transfer the money to a money-market or bond or is this most likely temporary... btw, i plan on not touching this monbey for at least 5-10 years.
Asked by marycotter5678 - Fri Aug 10 10:18:31 2007 - - 9 Answers - 0 Comments

A. Leave your money where it is. The market will bottom out, and you will gain all your points back and then some. Remember, you haven't lost any money unless you sell the stock at a loss. As long as you have the stock, you have the very good possibility of making money on it. You didn't have that cash yesterday and you don't have it today. Leave it alone.
Answered by jack of all trades - Fri Aug 10 10:29:49 2007

Based on the P/E of the broader stock market index, how do u determine whether the market is overvalued?
Q. Based on the P/E of the broader stock market index, how do u determine whether the market is overvalued?
Asked by pk - Wed Mar 1 02:04:07 2006 - - 1 Answers - 0 Comments

A. P/E measures "payback period", which is rougly equivalent to the inverse of the interest rate. Thus, a P/E which is GREATER than "the" interest rate is overvalued. For example, if P/E is 20, and "the" interest rate is 6% (0.06) then the inverse is 16.6 and then the market is overvalued... However. 1) What is "the" interest rate to be taken into account? First, it should a real interest rate. Second, it should be an interest rate for assets with the same uncertainty as the stock market (or see 3 below) 2) The P/E can be larger if you expect profits to grow a lot and/or for a long period. 3) The P/E can be larger if the uncertainty (volatilty) tends to diminish. Currently, volatility has been coming down for several years; the markets… [cont.]
Answered by Manolo - Wed Mar 8 15:41:11 2006

in which way politics,sports affects stock market index(sensex)?
Q. in which way politics,sports affects stock market index(sensex)?
Asked by venkat - Thu Jan 10 06:28:33 2008 - - 1 Answers - 0 Comments

A. any political movement through which govt stability will be affected, or economy suffered could effect mkt negatively & vise versa. sports not much affected ,except some world cup cricket , or some important match day on which day participation of treaders investors comes down
Answered by Udit D - Sat Jan 12 03:30:25 2008

Vanguard Total Stock Market index fund?
Q. What are your opinions on it??
Asked by Michael G - Tue Dec 4 22:43:03 2007 - - 3 Answers - 0 Comments

A. I regret to say that I do not have a very high opinion. Here is the problem. Even though the name is total stock market, it is not exactly that. Although the fund contains 3607 stocks they are all U S companies. Furthermore, it is capitalization weighted which means that the 10 stocks make up 16% of the portfolio. 50 stocks probably make up 35% or more. What is the real point of the other 3650 stocks? And U S stocks account for less than 40% of the world stock market. The name itself is a misnomer. Not only that buy its return is almost pathetic at 6.77% for 10 years. Bonds would have given a better return almost without the risk. I have a much higher opinion of the Vanguard Global Equity Fund. 10 year return is 13.11%… [cont.]
Answered by muncie birder - Tue Dec 4 23:00:56 2007

what is the uses of stock market index ?
Q. uses
Asked by missred - Sat Jun 12 20:46:26 2010 - - 4 Answers - 0 Comments

A. I don't know whether you wanna know about why stock market or Index only but from your q you wanna know about index. There is no use Index or even stock market to people who don't invest or trade in market.But for those who trade, Index gives the direction of the whole market for example sensex, the sensitive index of BSE give the direction of the market because the 30 companies in the index are from different fields thereby giving almost whole direction of the market. Some other index gives the direction of only that field e.g Bankex gives only the direction of banking sector.
Answered by SCALE - Sat Jun 12 21:02:29 2010