Vanguard funds

[Gjowers]

I might be totally off my rocker, but I'm thinking it might be a good time to get some equity exposure. I'm looking at Vanguard index funds. I'm considering the S&P500 fund and the small cap index fund. I know the historical returns of the S&P have been around 10%, but the last 10 years have been pretty dismal. It looks to me like small caps have fared better. Where does a prudent investor put some money these days. Thanks

[disneysteve]

I think the answer depends on what you already have. Tell us what your portfolio looks like now. As for the money you are thinking of putting in these funds, what is that money for? Is it retirement money? How long before you need it?

[jIM_Ohio]

You need both small caps and large caps.

Look at total market to see both combined.

Asset allocation will be the question you need to ask yourself.

[Gjowers]

This is long term money. I am 32. As I was writing out my current holdings I realized that using my first initial and last name as a screen name was probably not a good idea. So, without posting my finances, I'll just say this is investment money. Emergency fund and CDs are covered. I have a 401K and 529 as well. I'm just thinking that now might be the right time to get some stock market exposure outside of my 401k, something I might want to dip into in 10 -15 years. I'm only starting with 10k and then will make monthly contributions of probably 200.

While the stock market may go lower, and make take some time to get back to where it was, I'd like to buy now and ride it up if that's the way it plays out. So, what I'm wondering is whether the smart money is on the small caps or the large caps. Thoughts?

[jIM_Ohio]

taxable account- use extended market/ total market fund.

Keeps distributions (taxes) low and has small and large caps included.

[Helena_Handbasket]

I think a mix of large, mid and small cap investments is a good idea. Although I'm also wondering if many large cap funds are on their way to becoming mid cap funds

Once you get your asset allocation figured out, remember these words - "Tax Efficiency." Because you are going to invest in a taxable account, make sure to put the money into tax-efficient investments. Look into tax-managed funds and index funds. It's probably best to avoid single stocks or actively-managed stock funds. There are lots of choices out there. Take your time to research.

[MaxPowers]

Are ETFs tax efficient?

[kv968]

ETF's are very tax efficient in the fact that they trade like stocks and the only time you'll realize a loss or gain is when you sell them (unless they pay a dividend). However, you'll have to pay a broker commission to buy them.