The Bogleheads Have Won: Dipping My Toes Into A Mutual Fund With Vanguard

As I’ve mentioned before, I am rather timid when it comes to investment risk. I am very very wary about letting others have control of my money, especially when there’s a chance they could lose some of it.

Yet I continued to see the astounding rates of return of many mutual funds, and as I slowly watched excess money build up in my emergency fund, I finally decided I needed to do something with it that exceeded even ING’s stellar interest rate.

To begin with, I decided that an index fund was the safest route for me. As I mentioned, I like investments that don’t cause me to lose money, and to me, paying fees for mutual funds is losing money. Index funds are managed very inexpensively, so that means that I’d be turning over very little for mutual fund management, something that made me feel more secure as a person looking into mutual funds for the first time.

My second thought was that I wanted to invest my money with a company that has a strong long term track record. Lots of investment companies do a good job of taking care of their customers, as they know that investors will just take their money and move elsewhere if they’re not getting what they want. What I wanted was a company with a long history of taking care of investors, particularly timid ones like me.

One afternoon, I spent a long time reading about Vanguard and its founder, John Bogle, and I came away with a distinctly different feeling about their organization and philosophy than I had felt about almost all of the other organizations I’d looked at. Their whole organization and philosophy seemed geared towards taking care of the individual investor, which was exactly what I was looking for.

Since Vanguard actually introduced the first index fund, the Vanguard 500 (Please Note: This offer is no longer available), there’s literally no index fund available with a longer track record. After studying the information carefully and stewing on it, last month I took my first dive into a mutual fund (outside of my retirement investments) and bought into the Vanguard 500.

Since the initial investment required for the fund is $3,000, it took some real courage for me to jump into this investment. I read reports of all kinds, slept on it, read some more, and slept some more before finally convincing myself that it was the right thing to do.

Thus far, the experience has been overwhelmingly positive. It was quite easy to get the account set up with Vanguard. Managing the account has also been quite simple and enjoyable, and now I just sit back and watch the fund fluctuate and slowly creep upwards and try to ignore the butterflies in my stomach.

Given this positive experience, I am strongly considering using them when I set up my Roth IRA early next year (if you’re scratching your head over why I bought this fund without having an IRA already … well, read about my fears and chalk it up to those).