Just Buy Index Funds Directly

Buy index funds directly from no load mutual fund companies to save money.

To buy S&P 500 index funds, click on any of the 10 low cost, no load mutual funds below to find additional information about them. The article “Top 10 S&P 500 Index Funds” explains how this list was developed. The five letter term in parentheses is the fund’s trading symbol.

  1. California Investment S&P 500 Index Fund (SPFIX)
  2. Fidelity Spartan 500 Index Fund (FSMKX)
  3. Schwab S & P 500 Index Fund (SWPPX)
  4. SSga S&P 500 Index Fund (SVSPX)
  5. T Rowe Price Equity Index Fund 500 (PREIX)
  6. United Association S&P500 Index Fund (UAIIX)
  7. USAA S&P 500 Index Fund – Member (USSPX)
  8. Vanguard 500 Index Fund – Admiral (VFIAX)
  9. Vanguard 500 Index Fund (VFINX)
  10. Vantagepoint 500 Index Fund – Stock II (VPSKX)

You should be able to go directly to buy most of these 10 funds. To invest you can call them directly and/or download and complete investment forms from their websites. When you shop for mutual funds, always pay attention to the details. Understand whether there are other restrictions, costs, and purchase conditions associated with buying any index mutual fund.

There is still is a range of total annual expenses within the list above, but the range is much narrower than the total of 202 index funds tracking the Standard and Poors 500 composite index that Haslem, Baker, and Smith studied to derive their list of 25 low cost mutual fund, from which this list of 10 is derived.

The good news is that the mean or average expense ratio for the list of 25 funds in the original study was .19% per year. Therefore, it might still pay you to shop around even within this list of 10 mutual fund above. Even a .1% annual expense difference in index fund expenses can mount up year after year after year.

Some S&P 500 index funds can only be bought through a broker or investment advisor.

Buying an S&P 500 index fund through an investment counselor can substantially increase your initial purchasing costs and and drive up your annual management expense fees. Unfortunately, the vast majority of individual investors buy mutual funds and ETFs through brokers and investment advisers. Rarely do financial advisors recommend that you buy index funds with low fees. This is because low cost, no load mutual funds do not pay them as well as loaded, high fee mutual funds. The ten S&P 500 index funds in the list above can be purchased directly from the fund without any advisor fees.

Many financial advisors will claim that more expensive, actively managed funds will give you better results, but such self-interested claims are not supported by a vast body of investment research. Unfortunately for your pocketbook, the added costs far exceed the added performance. You get the short end of the stick, while you support your advisor’s lifestyle. Now, is this not supposed to be the other way around?

Equity index funds promoted by investment advisors are often much more expensive.

Brokers and investment advisors typically offer you only A Class, B Class, and C Class shares. A, B, and C Share Classes add front-end loads and/or back-end loads, and these share classes often carry much higher annual management fees. Then, a .25% annual 12b1 marketing fee will be tacked on top of these higher annual management fees.

Why? Well, these 12b-1 fees provide an ongoing revenue stream to your advisor, so that he or she will be paid to keep telling you to buy more expensive funds. You pay extra to your advisor year after year, so he or she will keep telling you year after year that paying extra is good for you, when most often it is not. Does this seem like a strange set-up to you? It is. It is called a conflict-of-interest where your best interests get to take a ride in the back seat, while you pay your advisor’s fare at the same time.

Now, sometimes an investment advisor will play the industry’s little game of graciousness and cost sensitivity and “waive” the fee for you. Of course, the financial advisor will only waive the fee, if he or she feels that you have already “produced” enough revenue and commissions for the advisor and the firm. While industry representatives will show you business cards that say “investment advisor” or “investment counselor,” they do not tell you that within the industry they are all called “producers.”

Producers of what you might ask? Producers of revenues paid by you and your assets and by all other clients and their assets. Producers “waive” a few fees selectively to keep your investment assets under the firm’s control for future milking. Fees get waived to mollify clients who complain. The quiet sheep just keep paying.

Some Firms Make It Easy to Buy Index Funds Directly — Find Them, Patronize Them, and Save a Bundle

If you do not think that a financial advisor will really add any value when you buy index funds, then just buy no load index funds directly and cut out these expensive intermediaries. Use your favorite search engine to do your own research online about any no load mutual fund. Read the materials and prospectuses that are available from the investment fund websites. Mutual fund websites make it very clear very quickly whether they are set up to deal directly with you. If they want your business, you will find a prominent “800” number and easily downloadable investment forms and instructions.

It is really not that difficult to buy index funds directly and be careful about it at the same time. Nevertheless, if a mutual fund family has a no load S&P 500 index fund on the list above, that does not mean that the other mutual funds offered by that investment fund company are necessarily low cost, as well. Be careful and check expenses before investing.

Also, you may notice that there are no ETFs in the list above. If you want to find low cost S&P500 ETFs, click this link to learn more: online investment fund screening tools. By the way, only experienced traders should select S&P 500 EFTs over investing in a similar low cost S&P500 index mutual fund that can achieve the same low cost investment objective without the need to understand how to trade and what the pitfalls of trading might be. There is a whole world of other investment products out there and ETFs are a subset of the larger group of exchange-traded products — some of which do not behave like ordinary mutual funds. There are exchange-traded funds, exchange-traded notes, and other commodities based exchange-traded products that employ leverage, use managed futures, and in effect, may invest either short or long. You need to know what you are doing, when you venture into this realm. Most of the time these exchange-traded investment products will be much more costly and will entail increased risk compared to good old passively managed S&P 500 index mutual funds.

Your decision on whether to purchase or to sell any investment is yours and yours alone. READ OUR WEBSITE DISCLAIMER HERE: No Load Index Funds

Just Buy Index Funds Directly

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