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!Should I choose a stock or fund?
!If I choose a fund, should I bite the bullet and find
!a brokerage with a lower fund fee? Likewise, might it
!be a good idea to open an account with a fund manager
!such as Vanguard and buy their funds through them?

Last time I looked at various index funds, it was a bit of a wash between SPY and the fund before commission costs, with two cautions:

[1] Some funds charge you extra if your balance is below a certain amount. I think with Vanguard the magic line is $5000, and the magic time they check is some day late in the fall. If you are below the magic amount at the magic time, they withdraw their fee from the account.

[2] Just because a fund has a very low cost (and some fund costs are a bit below the SPY costs), doesn't mean they track the S&P 500 all that well. Fidelity has an index fund with costs below that of Vanguard, but the fund performance drifts away from S&P more than expenses can account for. Obviously they are doing something to reduce the frequency of their transactions, and the fund performance is being impacted more than the savings really justifies.

If your broker charges you more for buying the fund than SPY, then it sounds like you should look at SPY. You could also look for a different broker that has the fund you want as a no-transaction-fee fund. As you said, you also have the advantage of just opening up an account directly with the fund and thus avoiding the transaction costs (but watch out for the extra charges noted above). Then it just comes down to flexibility: if you want the S&P stuff to build, and then do something with it like buy Rule Makers, then the brokerage account is more flexible. If you don't think you are going to do that, then just go for the lowest cost that gives you a close match to S&P 500.

!Is there a fund that tracks the NASDAQ? For instance,
!SPY is to VFINX (Vanguard Fund tracking the S&P 500)
!as QQQ is to what?

QQQ tracks the Nasdaq-100, the top 100 companies. Same idea as the S&P 100; you are looking at large caps heavily weighted to technology. The only fund I know of that really tries to track anything like this is Rydex OTC. They don't passively track the Nasdaq-100; they trade themselves silly. So far they seem to be just good enough at their trading to offset the added costs of the fund caused by the high portfolio turnover. They'd probably make more money, and their tracking would definitely be closer, if they didn't try so hard. I have money in their fund for my 401k because I can't buy individual stocks in it (the decision of my employer, not the 401k provider...drats).
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