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Vanguard: A Solid Mutual Fund Company

Black Belt Shopper (featured column)
by Larry Wiener

Two or three years ago a friend of mine insisted that no one should be in a mutual fund because you could do better trading stocks on your own. Now that same friend will have nothing to do with stocks because you can’t make any money in them.

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With all the confusion out there about stocks, now more than ever is the time to be prudent and sensible about your investments. That said, you can do a lot worse than Vanguard as a place to put your money.

Vanguard is a diversified mutual fund family with a great variety of funds–stocks, bonds, balanced, overseas, and blends of all of the above. The family has a great website and extremely helpful phone representatives. I have a large portion of my own money in Vanguard funds.

Here are some of the family’s strengths:

Low costs 

Every mutual fund company charges in one way or another. Vanguard charges less than most. Being a mutually owned company, it is not necessary for Vanguard to pay stockholders. Vanguard tends to trade less frequently than some fund families which keeps costs down. Additionally, because Vanguard is not available 24/7 for every service, you don’t have to pay in lower returns for not being able to speak to a retirement specialist at 2 AM on Christmas morning.

A wide variety of funds 

While not the largest fund family (that honor belongs to Fidelity), Vanguard does have a very large variety of funds. You can invest in one sector or in the entire market. You can get a socially responsible fund or one that invests in other Vanguard funds. You can build a diversified portfolio easily.

Many index funds 

Many investors like index funds because they charge such low fees. With index funds, you don’t pay a fund manager or management team to analyze stocks. Instead, the fund merely invests in an index.

Many excellent income funds 

Vanguard is a great fund family if you are investing for income with bonds and money market funds. Their fees are low and returns high compared to peers. Their money market fund allows you to write checks for $250, a lot less than some.

A great deal of assistance 

If you are one who can use a certain amount of hand holding through the process of selecting an investment, Vanguard may be the fund family for you.

Vanguard’s website includes a Plain Talk library on a variety of fund-related topics as well as news articles and other helps. Phone representatives and knowledgeable and courteous.

Vanguard is not for every investor. They have higher minimums ($3000 for non-retirement and $1000 for retirement) than some families do. They are not interested in customers who want to trade funds regularly and engage in market timing. They are not available to every investor’s 401(k) or 403(b).

If you are looking for a solid mutual fund company that will manage your investments responsibly while you have a life, however, you can do quite well with Vanguard.

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Copyright © 2002 by Larry Wiener. All rights reserved.

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