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I read "The Simple Path to Wealth." But honestly, the TL;DR is pick a low-cost broker (like Vanguard) and put your money into something broad, such as VTI for
by d23 4y ago
I read "The Simple Path to Wealth." But honestly, the TL;DR is pick a low-cost broker (like Vanguard) and put your money into something broad, such as VTI for the United States stock market. You could also mix in a world index and bonds, but the expected return on both are lower. All about your own risk tolerance.
- polishdude20 4y agoJust in case I missed anything... When you consider compound interest, it's not assuming you reinvest that money or anything. You just pick an index fund and keep adding to it every month for years and that's enough?
- svachalek 4y agoYeah do DRIP (dividend reinvestment) as they'll periodically pay out dividends as cash. DRIP will automatically buy more shares. In a taxable account every time you sell you lose some to taxes, hurting your compounding, so stability is especially important in taxable accounts. As you near retirement age you'll want to slide it towards a more conservative mix; you don't want a 50% stock market crash to add a decade to your career.
- highwaylights 4y agoGreat question! I’m not an expert so someone correct any of this that is wrong, but there are broadly speaking two types of funds: Accumulation and Distribution Accumulation funds will do the reinvesting internally, so they really are set-it-and-forget-it vehicles. (Distribution units hold the dividend returns as cash, i dont use these, I’m not really sure why anyone would but I assume there’s a tax reason somewhere).