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In response to
"What is the best (simple and cheap) index fund or ETF you would recommend and how would a novice investor buy into it? Asking for a friend."
by
GregW
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I started last year with a rollover at Charles Schwab. I also set up a Roth IRA account which is very easy. -- (edited)
Posted by
Max
May 14 '21, 09:34
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Once that's set up Charles Schwab provides a target portfolio mix based on sectors, and they have their own sector and market index funds with fairly low expense ratios. If you look at one of the funds they will also usually provide a list of four similar funds from other sources. Vanguard and Fidelity seem to be the lowest expense for index funds.
https://finance.yahoo.com/quote/VOO
Sector index funds are pretty much going to perform the same whether it's from Vanguard, Fidelity, iShares, Schwab etc. One thing to keep an eye on is whether the included stocks are by market weight or equal weight. In a market weight situation they may be heavily invested in one or two stocks. ie, TESLA has such a large market cap that sector funds have a huge holding, and so when that stock dives, the fund price dives with it. Versus an equal weight fund where each stock makes up 1% or so of the total fund, a single nosedive won't have as much impact; but you don't get the benefits of strong performers either.
The other brokerages advertised on tv would operate similarly to Schwab, so just pick one. I would suggest setting up an account, deposit enough money to buy a $300 share of something, and just get your feet wet before really diving in.
Earlier this year I set up this spreadsheet to track major index funds and prominent stocks in each sector but I'm not sure how well the Google Finance feed is working.
I put together this spreadsheet to track stock performance and compare sectors. It's open to edit and I'd welcome crowdsource improvements on it.
I use Schwab and went through every sector to get the highly rated examples of stocks, and sector indices and plugged them in with the ability to compare current prices to historical prices (averaged from start to end date inputs).
The Tickers tab isn't set up for tracking exact portfolio growth based on buying and selling shares and average cost basis over time, so if anyone has a good portfolio transactions tracker spreadsheet with coding they'd be willing to share, please do add another tab for it.
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