Sean has a post that links to a question by a 20 year old asking the Simple Dollar how he can retire at 40. I haven't been impressed by what I see of the American ideal of "retirement", but what also caught my eye was the suggestion that the young person put 20% of his income into the S&P 500.
Last year, Mary asked me about where she should save and we looked together at Vanguard Funds. We settled on the Star Fund, which is a "fund of funds". That is, it is a group of Vanguard mutual funds into which a dollar invested will be allocated by the Star Fund manager. This gives great diversification. Because these are Vanguard Funds, there is no sales commission and there are very low maintenance fees. There is no maintenance fee at all for the Star Fund management. So the maintenance fees that are allocated to one's account are those of the particular funds that make up the Star Fund portfolio. Morningstar gives the Star Fund 4 (out of 5 stars), which is very good.
There are some other savings plans that have caught my eye. One involves investing in Savings Bonds, of all places. There is no sales commission here either, and no maintenance fee. Of particular interest to me are I Savings Bonds. These are bonds that guarantee an initial rate and have an inflation component, which tracks the CPI. Having lived through the inflationary 70s, I can tell you that inflation risks are important considerations. I Bonds are accrual securities. The interest they earn are not paid out, but are added to the principal. In the meanwhile, there is no income tax payable until the bonds are redeemed. I Savings Bonds qualify for the education tax exclusion. That is, if the proceeds are used to pay qualified college expenses, no federal taxes are due! Go to the government's website for more information on buying US securities.
You can redeem the bonds after one year, but the idea is to use these for "deep savings". Of course, savings bonds and other US treasury obligations are the safest investments you can make. I wouldn't put all of my savings in the S&P 500 (for which Vanguard has a very cheap fund), as the Simple Dollar seems to suggest, I would allocate about 40% to Savings Bonds.
I learned about I Savings Bonds by reading about them in an article by Annette Thau in the AAII Journal. The AAII is the American Association of Individual Investors. One has to be a member to access that article on-line, but I would recommend joining that organization and reading the monthly magazine. You will be amazed at how much you can pick up about sensible investing from that publication.