Which two index funds? There are a lot of different indexes and a lot of different funds for each index. Most fund companies offer index funds of one sort or another, and then there are the ETFs.
Things to look at include how the fund is set up to invest – some put their money into other stocks as well as the indexed stocks, in an attempt to beat the market – and how much the funds charge you per year for expenses. Some funds also charge up-front fees or exit fees.
The two mentioned by MT and Mr. He (Vanguard S&P 500 and Vanguard Index Growth Fund). Just to get a better understanding.
A pure-play index fund will not buy any other stocks in any other ratio than the index composite. Its fees will be low, as it’s not managed by human beings, who are error-prone and expensive, but by a computer, which does not require performance bonuses. What you want is something big and broad, as it decreases the risk of one stock souring things up for you.
Therefore, a broad-based index fund tracking the economy of say US (using for instance Vanguard S&P 500 or the ETF for S&P 500 (No real difference as far as I am concerned)), should be what you need. If you then want some aggressive growth plays in order to spice up the performance, then consider the Vanguard growth index fund (But check that it’s a bona fide index fund), or an index fund / ETF tracking NASDAQ. When something say growth, it will usually imply that it’s riskier, but that the possible reward is higher. However, you make both a bit smaller by not betting on a stock, but on a whole index of them. However make sure that the index is narrow, as say “the Taiwan glass sector index fund” would in practice be made up of one stock.
You will have periodic drawdowns, but you have to take them in your stride, and not care too much about the S&P 500 going down 10%, which it will do at times. You are capturing broad long-term performance(11% per year for S&P), not near or mid-term drawdowns.
Ok, I think I got it. Thanks!
Is there any equivalent to the S&P 500 in Europe? Say if I want to invest in EUR and not in USD.
There are some European indices, and most likely a load of European index funds.Ask your bank.
Hm, I was hoping for some more specific advise for the European index funds, based on personal recommendations.
Anyhow, back to the Vanguard S&P500 - how can I invest in one? The Vanguard international site doesn’t list is as an option and for all there other funds the minimum investment is a whooping EUR or USD 100k. 
Mr He, could you please post the code (VFINX or whatever) for that fund to avoid any confusion? Thanks!
100,000 US is not that much seen from a long-term investing viewpoint. They call it US 500 stock Index Fund.
Moreover, some brokers can get you into vanguard even though your investment is less than US$100k. Just go and find one.
If you can’t afford Vanguard, then there are alternatives, or you can open an account and buy ETF’s instead.
Here’s some information on how to open the account:
de.etrade.com/cgi-bin/gx.cgi/AppLogic%2bHome
… and now to choosing the right ETF for you.
indexfunds.com/data/ETFScreener.php?id=spy
That took me 5 minutes.
And while you are not buying vanguard S&P 500, you are buying something else doing the same.
If you’re a US citizen, you can open an account with basically any US brokerage pretty easily and be on your way to buying mutual funds, stocks etc. I use Fidelity for it’s 24-hour toll-free international number. TRowePrice was pretty good when I was in the US but it’s almost impossible to time my calls correctly to their limited phone hours.
Once you have the account opened and linked to a US bank account, you can basically do everything over the Internet.
If you are a non-US citizen, you can open a US account with a few more hoops to go thru.
Silly Response.
Of course, you can start reading up about investing, running model portfolios, finding investment advice, talking and learning…
You don’t need to wait two years, to start that.
If you do wait, I guarantee you’ll get the money together, invest it and regret it almost immediately!
Although your options are limited right now, that will not always be the case! So start planning TODAY, even if (especially) it’s just on paper.
When people start business, they usually get the idea first, do some research, then look for the funding! So…
I’d say
Get STARTED now!
Kenneth
Well the reason to that I like index funds is that it takes some of the risk out of investing. You can plough your money into them and while you will have losing years, the diversification over sectors will mean that you in the long run will do as well as the market. People buying pet stocks are rarely that lucky, and neither are the poor sould buying traditional mutual funds.
You can beat most of the professionals without doing very mych research, and some 11% cagr over 30 years is actually quite good.
Open the us brokerage account now, I think some of the brokers are satisfied with US$2000 for starters. Then you buy ETF’s for the money, lean back and plow savings into them 3-4 timess every year. After 25 years you should have a nice little retirement nest egg there.