Thursday, September 04, 2008 index fund tracking entire world market

Vanguard introduced a index mutual fund tracking the entire world's stock market. I do not know if any other company had introduced such  a fund a before.

Having been a very satisfied customer / investor of Vanguard, it came as a great news for me. Great opportunity to invest in one fund and ride (or fall) the entire world market. As usual, expense ratio is very nominal. Helps to keep most of your money in your own pocket. No fancy fund managers nibbling away at your hard earned money.

Looking at recent stock market performance, it is easy and natural to feel like taking away all money from market and think of doing something else. Of course, that is a good strategy if and only if you have a better investment opportunity. Otherwise, pulling out money when market is not doing well is the worst thing one can do. This is even more true if you are invested in a highly diversified portfolio. Highly diversified portfolios with long investment horizon (say 10 years or more) have done well regardless of intermittent market downturns. Unless history proves us all wrong, this time should be no different. Sit tight and very soon you will be sitting on a pot ( that is pot of gold).


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