Abstract (Document Summary)

Most -- not all -- of these funds have the exact characteristics that a serious long-term investor needs: diversity, low cost, tax efficiency and good service. It just doesn't get any better than that. I'm speaking of such mutual funds as Vanguard Group's Vanguard Total Stock Market Index Fund (this is from the firm whose founder, John Bogle, pioneered index investing) or Fidelity Investments' Fidelity Spartan Total Market Index Fund. Both of these funds give you low-cost, extremely broad exposure to the overall U.S. stock market.

While times have changed, my opinion of IPOs hasn't. My conclusion is that most individuals should just stay away from IPOs. The reasons for that conclusion, however, are different. The fact remains that some schlocky IPOs still get palmed off on innocent and unwary individual investors. But as the IPO frenzy has grown and more individuals clamor for shares, it makes sense for the investment bankers to let them in on the initial offerings, simply because in their emotional hysteria (often fueled by Internet chat rooms touting the IPO) these individuals bid the prices up to incredible levels, allowing the underwriters to make huge sums as they sell the shares they held in the fledgling company.

it isn't just opportunities that draw me abroad. As you probably already know, diversification is the hallmark of a good investor, and foreign stocks add diversification. I won't argue that you should have 60% of your portfolio abroad, but I do suggest that you have up to 20% of it outside the U.S. as long as you are cognizant of and willing to take the risks.