Reply To: Investment Ideas- use at own risk

Joseph, if you are unfamiliar with even basic Sindarin then I am unable to help you.

Target date mutual funds suffer from the same problem as other actively managed mutual funds.

yitzy99, very true. The key is finding them. Vanguard has a few mutual funds with very low expense ratios (.3 percent I believe), while the typical mutual funds have expense ratios of 2% or so. This means that if the S&P goes up 8%, your Vanguard low-expense mutual fund goes up 7.7%, and your high expense ratio mutual fund, if it completely mirrored the S&P, goes up 6%. Furthermore, most mutual funds are actively managed, so they buy and sell a lot. This generates capital gains taxes which eat away at your gains. So you are paying taxes for the privilege of underperforming the S&P 500.S&P 500 index funds are passively managed. they only buy and sell when changes are made to the index. this reduces capital gains taxes. Furthermore, companies are usually removed from the S&P500 after severe underperformance. This creates losses which lower capital gains taxes.