overst33r

First of all, I would like to make clear that I am a newbie when it comes to investing. I am young and would like to take advantage of an investors best friend; time. With those two things in mind I have concluded from some research that I should stick to index funds. It seems that Vanguard has a pretty good expense ratio and the fees are reasonable.*

Based on some research, I decided that the funds I would like to invest in are: VFINX, VEXMX, VEIEX. (Feel free to suggest other funds, but please provide some supportive reasoning).

I plan on keeping the money in the funds long term (at least 5 years, ideally 20+)

I am not sure which fund I would like to put the majority of my money into...
I was thinking VFINX because it will probably be more stable? Although the shares are much cheaper for the other two funds which would probably yield better results in the short term as well as long term using my no0b logic...

I plan on using the "dollar cost averaging method" when I add money to the funds. Is this a good way to go about it?

On average I have about $200 a month left over to spend on anything I want. What would be a good way to split it up amongst the funds I have chosen above?

Another specific question I have is what kind of account do I need to create with Vanguard? According to their descriptions I think I should create a General Investing, Individual, Vanguard

SD_S2K

Many on this forum are not into index funds and Vanguard type investing. Personally, I follow this route, as it is simple, easy, and history has proven it very stable and rewarding. *Past performance is not indicative of the future of course

I have a small portion of a roll over IRA in VFINX, but I think you would be better off putting that portion in the TSM fund (Vanguard Total Stock Market Index Fund Investor Shares (VTSMX)) and the other two are ok. I have most of my money in the Target Retirement funds, and a small separate portion in the VEIEX by itself (along with the VFINX roll over)

For these funds (especially the TSM) you want to leave your money for a long time, as compounding interest is your friend. It also depends on what sort of vehicle you have the money in - Roth, Traditional, SEP IRA.

Re:
"I am not sure which fund I would like to put the majority of my money into..."

You need to decide what your risk level is in terms of stocks, bonds, etc = asset classes. You can go on vanguard's site and do a test or quiz to determine what asset class would be best for you.

Since you listed no bonds, you are considering a 100% stock portfolio. Very risky, but if you are young with a 30-40 yr time line, you might as well.

I would say 75% in the TSM and split the other 25% with the other two funds.

**However you have to have a minimum of $3000 in each fund to invest. So you might have to plug it all into TSM for now, or put the 25% into the Prime Money Market fund (VMMXX) till you can buy the minimum for the other two funds.

Sign up for the email notifications and the email prospectus stuff, and it should waive most of the fees. Some other small fees are incurred if you have below minimums depending on the funds. Otherwise Vanguard is the market leader in low cost low fee index/mutual funds.

RE:
"Is this a good time to start such an account? Can anyone forecast any major dips?"

That is impossible to decide, and is up to you. No one knows what will happen to the market today, tomorrow, a week from now. The safest way to do it is in batches. Put your money in once a month, once a quarter, whatever. Some do it right at the beginning of the year. Again, figure out what is best for you. "Market Timing" is for people not buying Vanguard funds, but buying individual stocks and trying to be a day trader.

This is my 2 cents, I am not a professional, and my advice should not be taken as such. I am not responsible for what you do, and offer this as advice and not recommendations. You can also call Vanguard and speak with a licensed rep who can help guide you on the above.

The advantage you have is starting young and continuing to invest every day, month, year etc. Compounding interest is the 8th wonder of the world.

Dlish

The VG funds are notorious for low cost. Yes, there is the online package for the free IRA, besides any low balance fees the only cost would be the fund expense ratio. The Star fund is the only VG fund with a 1000$ minimum, the rest Look around at fidelity and american funds, Vanguard has the lowest expense ratios. For a hands off long term like you are looking for the VG funds cannot be beat. And i cant stop dumping money in everytime i see the market going lower and lower, what a great time to buy.

rai

IDK about the funds you are specifically looking at, but if possible look at a ROTH IRA or 401K (if you can) tax savings mean a lot. But be aware that the money is tied up if you do this so it would not be good idea if you did need to take this money out.

Have an idea of what you need. As you don't have much money to invest ($200 a month) doesn't add up to a lot but if you invest for a long time it could add up to a larg sum.

$200 a month in a tax sheltered account for 40 years can get you near or over $1M (from just $96K you would contribute) also note the higher return would offer substantial reward. (ie. if you got 9% return you'd be $940K but if you got 10% you would be at $1.25M).

You can check what you could save with this calculator -->>click

and always better to save more. I would advise you to save at least 10% of your gross pay

SD_S2K

Just dumped a nice sum into my SEP IRA today, as my VG fund is down

QUIKAG

If you're going to do a couple Vanguard index funds, you might as well do their target date retirement funds and just plow your money in there and dollar cost more money in over time!