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For my IRA account, are there any advantages in investing in the commercial index funds, such as the Vanguard 500 over the S&P 500 index fund (spiders?)? Don't they both track how the market is doing? Would it be cheaper to invest in one over the other in terms of various adminstrative fees?

Thanks,
Sam
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For my IRA account, are there any advantages in investing in the commercial index funds, such as
the Vanguard 500 over the S&P 500 index fund (spiders?)? Don't they both track how the market
is doing? Would it be cheaper to invest in one over the other in terms of various adminstrative fees?


Excellent question. I have used both and can see some advantages to both. The thing I'm not sure about is the relative costs (as in expense ratios). I know that VFINX costs $10 per year for the account plus an expense ratio of around .19% which is darn cheap as stock funds go. The SPY costs include the trades and whatever the manager of the unit trust takes. This latter is what I'm not sure of. I find the SPY to be easier to manage in some ways. From your online discount brokers site you just buy or sell as if it were any other equity -- no other account needed. Both SPY and VFINX track the S&P 500 Index very well.

I'll be very interested in other replies.

Persevere!
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This question has been asked several times.
In terms of total return Vanguard provides the better investment, but only by a narrow margin. if you purchase them both on same day and hold them Vanguard will give you a little better return.
They are almost equal.
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This question has been asked several times.

Egg on my face.

Sorry. I've been off the boards for about 6 months.

It appears I've made the right choice if only by accident. I've got VFINX in a 403b. Have, however, bought and sold SPY in after-tax account from time to time. I suppose since there is a narrow margin in favor of VFINX, if one had to pay a fund fee in a brokerage account for VFINX the nod would go to SPY.

Any thoughts?

Persevere!
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FoolishProf writes:

<<I suppose since there is a narrow margin in favor of VFINX, if one had to pay a fund fee in a brokerage account for VFINX the nod would go to SPY.>>

In general, that's correct depending on the brokerage fees involved.

Regards..Pixy
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Didn't mean to place any egg. Wished I had writeup so I could have just linked to.
All analysis did not include fees in brokerage account.
Have not done the math. But I would assume that SPY would be better given that situation.
I was in that situation. So I used a check and 33 cent stamp and purchase Vanguard from Vanguard. The difference does justify that action.
IMO that is.
There is an investment philosophy that says these unit trust indexes like spy and QQQ are nothing more than investment pools that existed during 20's.
ie they are dangerous.
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mphipps sends:
Didn't mean to place any egg.

No harm done by you. Just my slack for not keeping up with the board's chat nor doing a search of past posts.

Still an interesting topic. Especially your last comment:

"There is an investment philosophy that says these unit trust indexes like spy and QQQ are nothing more than investment pools that existed during 20's. ie they are dangerous. "

Wouldn't it be just as dangerous to enter a similar period as the late 20's, i.e. a depression, with a heavy allocation to those individual equities that make up these indexes?

Persevere!

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Wouldn't it be just as dangerous to enter a similar period as the late 20's, i.e. a depression, with a heavy allocation to those individual equities that make up these indexes?

NOpe.
The combination of manipulation of index in such as way as to affect the underlying stocks. That is the concern. Shorting, runnnig up, pooling to pyramid the index thus forcing changes in the underlying stocks.

As long as the index changes are results fo changes in stock values its ok.
But when the underlying stock prices are forced to change because of the manipulation of the index value then its a big problem.
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The annual expenses on SPY -- commonly known as Spiders -- have been reduced to a maximum 0.12%, or 12 basis points, from the current 0.18%.
see http://www.thestreet.com/_yahoo/funds/funds/898769.html
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