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Originally posted by masraum
Interesting info. I'm an investment novice, less than that really. The extent of my knowledge is that all funds eventually aspire to be as good as the S&P500, so that's where my 401k goes.
I read these threads with interest. Are there any good basics or beginners books out there??
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One book I strongly suggest:
The Bogleheads' guide to investing
by Taylor Larimore, Mel Lindauer, and Michael LeBoeuf
Amazon carries it.
You are thinking in the right direction. A very small percentage of fund managers beat the total market index in any given year. (this book will give you the historical numbers on that) The names of those managers change from year to year. This stands to reason because of the market switching from one sector to another. As you get closer to retirement, you might consider switching from equities to treasuries on a %age basis, depending on your tolerance of risk. Your 401K probably gives you no choice of the firm you buy the S&P index fund from. If you do this outside your 401K, keep a close eye on the fees you are charged. Fees matter!