Approximately a week ago I was talking with a young woman who is earning a bit above minimum wage so she does not have much to save. In addition, she is helping her family rebuild their home, damaged by flood. Her knowledge of investing is close to nil, yet she wants to begin investing. Regular readers of this blog know that a wide range of topics are covered beginning at Level 100 and moving up to Level 400 topics. How does one help a beginning investor get started? This woman has no interest in the Gordon Equation, Optimization, Sortino Ratio, ITARR modeling, or anything to do with the TLH spreadsheet.
To make investing as simple as possible, assume you were constraint to investing in only one ticker. Two ideas immediately come to mind. 1) Vanguard’s Total Stock Market Index Fund, VTSMX and 2) Vanguard’s Total Stock Market ETF, VTI. Granted, both cover only the U.S. Equities market, but either of these investments is where I would start, and VTI was my recommendation to this young woman. If I were limited to making only one investment, my choice would be VTI.
What advice would you pass on to a prospective investor such as the young woman described above? Remember, limit your investment to one ticker so as to make starting a portfolio as simple as possible.