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How to choose mutual funds to invest in (lemm.ee)

submitted 4 weeks ago by scytale@lemm.ee to c/personalfinance@lemmy.ml

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I've been on an HSA+HDHP for a couple of years now and only realized recently the interest earned from investing HSA money is also tax free, so I want to start investing a part of my savings and see how it goes. I have 2 options, Betterment or Mutual Funds. I figured I'd try the latter to avoid fees, but I'm not sure which funds to choose. My HSA currently provides 30 fund options.

I see people mentioning Vanguard a lot so I spread out my initial investment into 25% chunks across 4 different Vanguard funds. How did I choose them? Well I literally just looked at the performance graphs and selected the ones that historically went up steadily without major dips. As a total noob, how can I improve my choices? Is there a simple way to decide without having to dive deep into the stock market?

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[–] Jarvis2323@programming.dev 3 points 4 weeks ago* (last edited 4 weeks ago) (1 children)

You can have it all with one brokerage in one fund and still be diversified. Suggest reading up on the 3 fund portfolio or boggle head.

S&P 500 is top 500 US companies. Many folks consider that diverse. You can also probably find a US Total Market fund. That will be even more diverse as it will include small and mid size companies in addition to the top 500.

Alternatively, even more diverse would be a Total Market fund. These typically include international companies, and represent the biggest diversification you can get.

No need to worry about Vanguard versus Schwab . The underlying stocks of the fund is what matters.

[–] scytale@lemm.ee 1 points 4 weeks ago* (last edited 4 weeks ago)

Thank you! Your explanation clicked in my head. I thought Vanguard vs Schwab, etc. meant different underlying stocks; didn't understand that's the brokerage. I will definitely take everyone's advice and look at the S&P 500 (I think that's one of 4 I chose, I'm not at my desk right now).