As I wrote last month, a volatile market can provide choice investment opportunities. It's when stocks are on sale, after all, that savvy types go shopping. What's more -- counterintuitive though it may seem -- turbulence is good news for new investors, too. It means they have a chance to begin building their nest eggs on the relative cheap.
With that in mind, this commentary begins a three-part series on smart moves that brand-spanking-new investors ought to consider as they test the market's waters.
First up: Building your portfolio around solid large-cap stocks.
In my view, just about every investor should anchor their portfolio to a well-diversified basket of large-cap stocks, and one terrific no-muss, no-fuss way of doing that is to invest in rock-solid mutual funds.
Specifically, you may want to consider an index pick such as Vanguard 500
Lump-sum investors, meanwhile, can go an even cheaper route by plunking down their moola in the popular S&P-tracking SPDRs
That said, investing exclusively in index funds means that you're pretty much destined to lose to the market each year by about the amount of the fund's annual expenses. Fools can and should do better than that, which is why I'm a fan of active management -- and, in particular, of pairing passive picks like Vanguard 500 with the cream of the fund industry's actively managed crop.
One fund worth considering is Neuberger Berman Socially Responsive (NBSRX). It targets the market's big boys, too, but the fund's strategy diverges from the Vanguard fund's in several significant ways. For starters, the management team here presides over a portfolio of just 35 names, a compact collection that recently included behemoths like Novartis
The results? This fund has bested the S&P over one-, three-, five-, and 10-year trailing periods. Not too shabby, eh?
That's a wrap
I'll be back next week with another Foolish tip for folks who are just getting going, but in the meantime, I encourage you to get the inside scoop on our upcoming GreenLight service. In the newsletter and on our information-packed companion website, we'll have tips aplenty for folks who are trying to a grip on their financial future -- smart ways to begin your investing career most definitely included.
Interested? Just click here, and we'll send you the skinny on how you can get started with GreenLight.
At the time of publication, Shannon Zimmerman didn't own any of the companies mentioned. Neuberger Berman Socially Responsive is a Champion Funds recommendation. You can check out the Fool's strict disclosure policy by clicking right here.