Why are some funds only recommended for investors starting out?
"A suitable mix of index funds IS a great option if you don't want to spend a lot of time and effort micromanaging your money. If you find amusement in pushing numbers around, you may be able to do better. Notice: MAY. If you have multiple millions, you can hire someone of that sort to push the numbers around for you. They may do better for you. Notice: MAY. And remember that part of your additional gains have to go to pay them, which means they have to do better just to be worth having on staff in the first place. If you have more than that, there are some options available which smaller investors really can't get involved in. As one example: If you have enough money that you can lose $100K without especially noticing, you can get involved in venture capital and the like which require a large commitment AND are higher-risk but can yield higher returns. Anyone who's dismissing index funds as ""only for beginners"" is being foolish. But recommending them to beginners in particular is a good thing since they let you get into the market with fairly predictable risk/benefits without needing a massive investment in education and time." I am a firm believer in TD's e-series funds.  No other bank in Canada has index funds with such low management fees.  Index funds offer the flexibility to re-balance your portfolio every month without the need to pay commission fees.  Currently I allocate 10% of my paycheck to be diversified between Canadian, US, and International e-series index funds. In terms of just being for beginners, this opinion is most likely based on the fact that an e-series portfolio is very easy to manage.  But this doesn't mean that it is only for beginners.  Sometimes the easiest solution is the best one! :) The simple answer is that whatever strategy is implemented with e-series, could be implemented at a lower cost with ETFs. "Most articles on investing recommend that investors that are just starting out to invest in index stock or bonds funds.  This is the easiest way to get rolling and limit risk by investing in bonds and stocks, and not either one of the asset classes alone.   When you start to look deeper into investing there are so many options: Small Cap, Large Cap, technical analysis, fundamental analysis, option strategies, and on and on.  This can end up being a full time job or chewing into a lot of personal time.  It is a great challenge to learn various investment strategies frankly for the average person that works full time it is a huge effort.  I would recommend also reading ""The Intelligent Asset Allocator"" to get a wider perspective on how asset allocation can help grow a portfolio and reduce risk.  This book covers a simple process."
"I know your ""pain"".  But don't worry about investing the money right now -- leave it uninvested in the short term.  You have other stuff you need to school up on.  Investment will come, and it's not that hard.  In the short term, focus on taxes.  Do some ""mock"" run-throughs of your expected end-of-year taxes (use last year's forms if this year's aren't available yet).  Must you pay estimated tax periodically throughout the year?  The tax authorities charge hefty penalties for ""forgetting"" to do it or ""not knowing you have to"".  Keep an eye out for any other government gotchas.   Do not overlook this!  This is the best investment you could possibly make.  Max out your government sanctioned retirement funds - in the US we have employer plans like 401K or Keogh, and personal plans like the IRA.  This is fairly straightforward.  Avoid any ""products"" the financial advisors want to sell you, like annuities.  Also if you have the Roth type IRA, learn the difference between that and a normal one.  There are some tricks you can do if you expect to have an ""off"" year in the future.  Charitable giving is worth considering at high income levels.  Do not donate directly to charities.  Instead, use a Donor Advised Fund.  It is a charity of its own, which accepts your tax deductible donation, and holds it.  You take the tax deduction that year.  Then later, when the spirit moves, tell your DAF to donate to the charity of your choice.   This eliminates most of the headaches associated with giving.  You don't get on the soft-hearted sucker lists, because you tell the DAF not to disclose your address, phone or email.  You don't need the charity's acknowledgement letter for your taxes, since your donation was actually to the DAF. It shuts down scams and non-charities, since the DAF confirms their nonprofit status and sends the check to their official address only. (This also bypasses those evil for-profit ""fundraising companies"".) It's a lot simpler than they want you to know.  So-called ""financial advisors"" are actually salesmen working on commission.  They urge you to invest, because that's what they sell.  They sell financial products you can't understand because they are intentionally unduly complex, specifically to confuse you.  They are trying to psych you into believing all investments are too complex to understand, so you'll give up and ""just trust them"".  Simple investments exist.  They actually perform better since they aren't burdened down with overhead and internal complexity.  Follow this rule: If you don't understand a financial product, don't buy it.   But seriously, do commit and take the time to learn investment.  You are the best friend your money will have - or its worst enemy.  The only way to protect your money from inflation or financial salesmen is to understand investment yourself. You can have a successful understanding of how to invest from 1 or 2 books. (Certainly not everything; those ingenious salesmen keep making the financial world more complicated, but you don't need any of that junk.)   For instance how do you allocate domestic stocks, foreign stocks, bonds, etc. in an IRA if you're under 40?  Well... how do smaller universities invest their endowments? They all want the same thing you do.  If you look into it, you'll find they all invest about the same.  And that's quite similar to the asset mix Suze Orman recommends for young people's IRAs.  See? Not that complicated.  Then take the time to learn why. It isn't stupid easy, but it is learnable.   For someone in your tier of income, I recommend Suze Orman's books.  I know that some people don't like her, but that segues into a big problem you'll run into:  People have very strong feelings about money.  Intense, irrational emotions.  People get it from their parents or they get sucked into the ""trust trap"" I mentioned with so-called financial advisors.  They bet their whole savings on whatever they're doing, and their ego is very involved.  When they push you toward their salesman or his variable annuity, they want you to agree they invested well.  So you kinda have to keep your head low, not listen too much to friends/family, and do your research for yourself.  John Bogle's book on mutual funds is a must-read for picking mutual funds and allocating assets.  Certain financial advisors are OK.  They are ""fee only"" advisors.  They deal with all their customers on a fee-only basis, and are not connected to a company which sells financial products.  They will be happy for you to keep your money in your account at your discount brokerage, and do your own trading on asset types (not brands) they recommend.  They don't need your password.  Here's what not to do: A good friend strongly recommended his financial advisor.  In the interview, I said I wanted a fee-only advisor, and he agreed to charge me $2000 flat rate.  Later, I figured out he normally works on commissions, because he was selling me the exact same products he'd sell to a commission (free advice) customer, and they were terrible products of course.  I fired him fast." There are a few main economic reasons given why investors show a strong home bias: Interestingly, though if you ask investors about the future of their home country compared with other countries they will generally (though not always) significantly overestimate the future of their own country.  It is difficult to definitively say what drives investors but this psychological home bias could be one of the larger factors. Edit in response to the bounty: Maybe this Vanguard article on their recommended international exposure is what you are looking for though they only briefly speculate about why people so consistently show a home bias in investing.  The Wikipedia article mentioned above has some very good references and while there may be no complete answer with the certainty that you seek (as there are as many reasons as there are investors) a combination of the above list seems to capture much of what is going on across different countries. "See Solid reading/literature for investment/retirement/income taxes? – not exactly the same question, but a great reading list for you. You are putting the cart before the horse here, first, you learn, then you invest. There's a large danger in confusing intelligent investing with ""fooling around"". The idea that you think you'd like to use derivatives without knowing how or why is a tough one.  I suggest you go to Yahoo! Finance and set yourself up with a portfolio (click on the ""My Portfolios"" tab), in effect, creating your own simulated account. Assume you are starting with some reasonable amount of money, say $10,000, but not $1M, as part of real investing is to learn how to asset allocate the funds you have. Learning that way for a time is the smarter way to start. That said, individual stocks are not for everyone. Most investors can lead a successful investing life by using ETFs or mutual funds of one type or another. Learning to pick individual stocks can be a life's work, and if you put too little time into it, are likely to be disappointed. But learning by 'paper trading' can be a good learning experience nonetheless." It appears your company is offering roughly a 25% discount on its shares.  I start there as a basis to give you a perspective on what the 30% matching offer means to you in terms of value. Since you are asking for things to consider not whether to do it, below are a few considerations (there may be others) in general you should think about your sources of income. if this company is your only source of income, it is more prudent to make your investment in their shares a smaller portion of your overall investment/savings strategy. what is the holding period for the shares you purchase. some companies institute a holding period or hold duration which restricts when you can sell the shares.  Generally, the shorter the duration period the less risk there is for you.  So if you can buy the shares and immediately sell the shares that represents the least amount of relative risk. what are the tax implications for shares offered at such a discount.  this may be something you will need to consult a tax adviser to get a better understanding.  your company should also be able to provide a reasonable interpretation of the tax consequences for the offering as well. is the stock you are buying liquid. liquid, in this case, is just a fancy term for asking how many shares trade in a public market daily. if it is a very liquid stock you can have some confidence that you may be able to sell out of your shares when you need. personally, i would review the company's financial statements and public statements to investors to get a better understanding of their competitive positioning, market size and prospects for profitability and growth. given you are a novice at this it may be good idea to solicit the opinion of your colleagues at work and others who have insight on the financial performance of the company. you should consider other investment options as well.  since this seems to be your first foray into investing you should consider diversifying your savings into a few investments areas (such as big market indices which typically should be less volatile).   last, there is always the chance that your company could fail.  Companies like Enron, Lehman Brothers and many others that were much smaller than those two examples have failed in the past.  only you can gauge your tolerance for risk. As a young investor, the best place to start is to use index funds which track a broader universe of stocks or bonds as the first step in building an investment portfolio.  once you own a good set of index funds you can diversify with smaller investments. A few months ago, I met with the founder of Wealthsimple. As someone with higher than average about both trading and investing, I asked him whether his funds would be able to add more value to my Couch Potato portfolio not in terms of returns but rather in terms of management fees. I also asked him this: if I wish to have a portfolio that has a specific % allocation towards emerging markets, would I be able to do so with Wealthsimple. The answer to both of the above questions was that I'd be better off investing by myself. I'd venture a guess and say that most people on SE Money wouldn't require a service such as Wealthsimple. "I think the answer to your question is no, in theory. By screening out funds, you must actively manage the investments. To then try to ensure you track the index closely enough, you have to do further management. Either you spend your own time to do this or you pay someone else.  This is ok, but it seems contrary to the primary reasons most people choose an index fund and why the product exists. You want a specific type of ethical investment(s) that has lower fees and performs well. I think you can get close, it just won't be like an ""index fund"". Don't expect equal results." Investopedia does have tutorials about investments in different asset classes. Have you read them ? If you had heard of CFA, you can read their material if you can get hold of it or register for CFA. Their material is quite extensive and primarily designed for newbies.  This  is one helluva book and advice coming from persons who have showed and proved their tricks. And the good part is loads of advice in one single volume. And what they would suggest is probably opposite of what you would be doing in a hedge fund. And you can always trust google to fish out resources at the click of a button. For a non-technical investor (meaning someone who doesn't try to do all the various technical analysis things that theoretically point to specific investments or trends), having a diverse portfolio and rebalancing it periodically will typically be the best solution. For example, I might have a long-term-growth portfolio that is 40% broad stock market fund, 40% (large) industry specific market funds, and 20% bond funds.  If the market as a whole tanks, then I might end up in a situation where my funds are invested 30% market 35% industry 35% bonds.  Okay, sell those bonds (which are presumably high) and put that into the market (which is presumably low).  Now back to 40/40/20.   Then when the market goes up we may end up at 50/40/10, say, in which case we sell some of the broad market fund and buy some bond funds, back to 40/40/20.  Ultimately ending up always selling high (whatever is currently overperforming the other two) and buying low (whatever is underperforming).   Having the industry specific fund(s) means I can balance a bit between different sectors - maybe the healthcare industry takes a beating for a while, so that goes low, and I can sell some of my tech industry fund and buy that.   None of this depends on timing anything; you can rebalance maybe twice a year, not worrying about where the market is at that exact time, and definitely not targeting a correction specifically.  You just analyze your situation and adjust to make everything back in line with what you want. This isn't guaranteed to succeed (any more than any other strategy is), of course, and has some risk, particularly if you rebalance in the middle of a major correction (so you end up buying something that goes down more).  But for long-term investments, it should be fairly sound.