Mutual Funds Investment! Need advice and help.

[freemanteo]

Firstly, i only need advice/opinions from those who are and had invested in Mutual Funds.

I donot know anything about Mutual funds, so i need simplified explanation.


I wish to invest maybe $100+ a month.

Pls advice, thnks.

 

[kranky]

There are two types of fees relating to mutual funds - one you see, and one you don't. The first is called a "load" and means you will pay a commission on the money you invest. That comes right out of your investment. The other is a management fee and comes out of the assets of the fund each year. The amount of that fee is something you should look at because they vary a lot. Not all mutual funds charge a commission ("load") and those are called "no-load" funds. Even those still have the management fee, though.

Vanguard is a company that has a reputation for having low fees. Check out some of the good information on their web site here. Check the "Planning & Advice" tab at the top of the page.

 

[tontod]

Check out Janus. I've invested in them since November of 1997.

 

[DaveSimmons]

Vanguard is a good company, and I recommend their S&P 500 index fund (VFINX) as a good starter investment. I got mine through Schwab, but you should go to the Vanguard site and see about investing directly -- Schwab isn't really set up for just $100/month (I think it's $350/month to avoid the $30 quarterly account fee).

If Vanguard doesn't have a direct-purchase plan you might need to put your money into a high-interest savings account for now at ingdirect.com until you've built up enough, otherwise the brokerage fees to buy fun shares in $100-200 lots would eat up years worth of profits.

 

[Maetryx]

Go with Vanguad. They're famous for inventing the no-load mutual fund and for having low management fees. Also, check out this amazing site that let's you make a mutual fund (called a folio) yourself!

Foliofn

 

[Moonbeam]

The best place I know of to learn everything you need to know about investing can be found here.

 

[glenn1]

I only know that there are some companies who charge and donot charge a fee.

There's no such thing as a mutual fund that doesn't charge fees of some sort. Wall Street and brokerage firms are not now, nor will ever be, non-profit organizations. Read the prospectus for your potential investment to learn what fees are involved.

Pls advice, thnks.

Two short pieces of advice.

1. look into EFT's (Exchange Traded Funds)

2. go here or here to actually do your investing, they're perfect for someone with your wants and needs.

 

[woodie1]

Another vote for Vanguard here. I've had Mutual Funds for 30 years. After paying outrageous fees I with some of the high return/fund of the moment places I have all my funds with them. They may not have the best return every year but will generally be in the upper 25%.

 

[freemanteo]

thnks for the quick response guys, i will read all those info.... might take a few days!


Any advice on the Pros & Cons of Mutual Funds?

Is there any risk? As in buying stocks of shares!

Any investments out there without significant setbacks/losses?

Sorry for the basic question, hope this will help others other than myself, thnks.

 

[NogginBoink]

Freemanteo,

First off, remember that the free advice you're getting here is worth what you're paying for. This is YOUR money, and YOU need to make the decisions on what to do with it.

Second, what are your investment goals? This should be a HUGE determinant on your investing. For instance, if you're saving for a house down payment in 2 years, you'd probably want to invest in a very low risk investment. On the other hand, if you're saving for retirement, you'll probably want a higher risk investment. Of course, if you're saving for retirement, you can invest within an IRA account which has tax advantages.

Good information can be found at www.fool.com for beginning investing.

 

[freemanteo]

i plan to invest as long as i can, if i need the money for house in 2yrs time, then i'll take my funds out, if not then i'll continue to invest till i need the money.

What is low or high risk? i only want to invest in something with sound assurance so i dun wake up with less money or bankrupt!

Does the company take care of the investments for you or do you have to watch it every day like stocks in the stock market?

What are you guys investing in?

 

[dirtboy]

The best mutaul fund company, which always gets high reviews is American Funds. The downside is they can only be bought through a broker, but they are the best. Don't get me wrong, Vanguard and others are good, but American Funds is the best.

 

[mithrandir2001]

Vanguard. No load, low cost. Broker-sold funds simply eat away at your hard-earned wealth.

Buy into one of their index funds, too. They have ultra-low operating expenses and they can't screw up like actively-managed funds can.

 

[dirtboy]

Originally posted by: mithrandir2001
Vanguard. No load, low cost. Broker-sold funds simply eat away at your hard-earned wealth.

Buy into one of their index funds, too. They have ultra-low operating expenses and they can't screw up like actively-managed funds can.

If you want an index fund, then yea, go no load. As long as broker fund is outperforming an index fund, than the fees are worth it. Besides, no load funds still build their operating expenses into the fund, so it's not like you are getting something for free.

 

[mithrandir2001]

Originally posted by: dirtboy

Originally posted by: mithrandir2001
Vanguard. No load, low cost. Broker-sold funds simply eat away at your hard-earned wealth.

Buy into one of their index funds, too. They have ultra-low operating expenses and they can't screw up like actively-managed funds can.

If you want an index fund, then yea, go no load. As long as broker fund is outperforming an index fund, than the fees are worth it. Besides, no load funds still build their operating expenses into the fund, so it's not like you are getting something for free.

Over time, index funds do better than a majority of actively-managed funds. And that's before you even look at loads and fees.

Look at Vanguard Total Stock Market Index. It's ranked in the top 25-44% over a wide range of time frames. If you pick an actively-managed fund, there's a better chance than not that you'll pick a fund that does worse than the cheap index fund.

It's not uncommon to pay a 4.5% sales load for an actively-managed fund that has a 1.5% operating expense. When you buy an index fund from Vanguard, you pay no sales load and you buy into a fund that might carry a 0.25% operating expense. These funds really are gifts to self-directed investors.

 

[kranky]

Originally posted by: freemanteo
thnks for the quick response guys, i will read all those info.... might take a few days!


Any advice on the Pros & Cons of Mutual Funds?

Is there any risk? As in buying stocks of shares!

Any investments out there without significant setbacks/losses?

Sorry for the basic question, hope this will help others other than myself, thnks.

Buying stocks and mutual funds isn't necessarily a real good idea if you are going to need the money in two years. They are for more long-term investing. Just think, if you had started investing two years ago and needed the money today, you would not be very happy. While in the long term stocks have gone up, they don't go up every year. There is risk involved. Mutual funds have less risk than individual stocks because one company's problems can't kill you. The poor people who had all their retirement money invested in Enron lost almost everything. That's not going to happen with a mutual fund.

As your potential reward goes up, so does risk. Savings accounts at a bank have just about zero risk, and pay very little interest. If you buy stock in a brand-new company that is trying to get a new product idea on the market, you have significant risk, but if it pays off the reward might be great. Any investment that doesn't have risk isn't going to make you much money. That doesn't mean it's always a good idea to take risk, though. Investing for the long term allows you to take more risk (i.e. buy mutual funds and stocks) because over time the good years will outweigh the bad. In the short term that's not true.

 

[burnedout]

Originally posted by: glenn1

2. go here or here to actually do your investing, they're perfect for someone with your wants and needs.

Heh, it is common knowledge that glenn1 has a good understanding of various subjects!

You might also check out the NAIC. Have been a member since 1989. DRIPs, or Dividend Reinvestment Plans, provide a great, low cost method of investing.

 

[FeathersMcGraw]

Originally posted by: kranky
Buying stocks and mutual funds isn't necessarily a real good idea if you are going to need the money in two years. They are for more long-term investing. Just think, if you had started investing two years ago and needed the money today, you would not be very happy. While in the long term stocks have gone up, they don't go up every year. There is risk involved. Mutual funds have less risk than individual stocks because one company's problems can't kill you. The poor people who had all their retirement money invested in Enron lost almost everything. That's not going to happen with a mutual fund.

Important disclaimer: I am not a financial advisor.

The first sentence above is key. I wouldn't invest any money in the stock market (either in individual stocks or mutual funds) that you anticipate having a need for within five years. There are low-risk mutual funds ("money market" or "income") that seek to preserve your investment, but given that these are generally actively managed, they have higher fees and whatever gains you make over a simple savings account tend to get eaten by the costs.

If you really think you'll need your money within a couple of years, consider a CD (certificate of deposit) or possibly savings bonds. The income level you get won't make you rich, but you're also guarding against the situation where money that you anticipate needing will be absent.

In any case, the idea that the original poster was willing to invest in mutual funds, which he "[didn't] know anything about" is a warning sign. Know what investing is, how mutual funds work, how markets work, and have a plan for your financial goals before you buy anything. My favorite introduction to investing for newbies is at The Motley Fool.

 

[Nitemare]

I have Strong and Invesco right now. They are load funds, but I look at it this way. Load funds are normally more actively managed and tend to increase faster than a poorly managed no load fund.

I would recommend a good index fund right now, and depending on whether you are an optimist or a pessimist...
If you are a pessimist and think that this recession is going to drag on longer, invest in a bear fund like Legg Mason Value Trust.
If you are optimistice, like myself, invest in my favorite Strong Growth 20, or some other Growth funds.

If you are the Uber investor and knows something the world does not know, invest in Sector and hedge funds or overseas markets. The potential rewards are great, but then again the possible losses could be devastating.

I am taking the risky side, and have most of my money in 2 Growth funds and a Technology Sector fund. I rook a bath at first, but now I am getting some killer shares with my automatic monthly purchases

 

[kherman]

Slightly off topic, but also consider index tracking stocks, like QQQ. There isn't a commision for managing your money. In the long term, that extra 1%-2% yearly savings(from not having management fees) will relate to big numbers in the real world.

Also, if your new to investing, try to keep enoiugh cash to live 3-6 months in your savings account. (The Oh S--t fund). Just incase, in the unfortunate event, that you loose your job or need a new transmission or whatever...

I don't invest in mutual funds...but it's a good thing that you're putting your money to work and saving for tommorrow! Good luck!

 

[kherman]

Oh, I just remembered. I believe Value Line does a Mutual Fund series. it should be at your local library.

I just checked online. www.valueline.com. "The Value Line Mutual Fund Survey" tracks about 2000 mutual funds. It's free to look at, at your local library.

Value Line's web page

A sample of what a review of one mutual fund looks like (free at your local library):
GABELLI VALUE FUND

Since Value Line is an independant company, with no advertisers or personal interests, they are quite blatent(in a politically correct way) about their opinions. The tone of the review says it all.

 

[dirtboy]

Originally posted by: mithrandir2001

Originally posted by: dirtboy

Originally posted by: mithrandir2001
Vanguard. No load, low cost. Broker-sold funds simply eat away at your hard-earned wealth.

Buy into one of their index funds, too. They have ultra-low operating expenses and they can't screw up like actively-managed funds can.

If you want an index fund, then yea, go no load. As long as broker fund is outperforming an index fund, than the fees are worth it. Besides, no load funds still build their operating expenses into the fund, so it's not like you are getting something for free.

Over time, index funds do better than a majority of actively-managed funds. And that's before you even look at loads and fees.

Look at Vanguard Total Stock Market Index. It's ranked in the top 25-44% over a wide range of time frames. If you pick an actively-managed fund, there's a better chance than not that you'll pick a fund that does worse than the cheap index fund.

It's not uncommon to pay a 4.5% sales load for an actively-managed fund that has a 1.5% operating expense. When you buy an index fund from Vanguard, you pay no sales load and you buy into a fund that might carry a 0.25% operating expense. These funds really are gifts to self-directed investors.

These funds are for people who don't know anything more than to pick an index or don't want to pay for expert advice. I honestly don't care what he does. Index funds aren't always that great.

Ripped from Yahoo!
Performance of VTSMX
Year to date, Vanguard has lost 5% more than the S&P 500. I'd rather pay 4.5% sales load than lose 5%. Atleast I'd be up 0.5%. Look at the fund's five-year average. It has consistantly lost money to the tune of 1.37% per year. Looks like if you put money here, you can start watching it go down. Not to mention that Morningstar only rates this fund with 3 stars. If you're not going to pay anything, you might as well get find 4 start Morningstar rated fund.

 

[mithrandir2001]

Originally posted by: dirtboy

Originally posted by: mithrandir2001

Originally posted by: dirtboy

Originally posted by: mithrandir2001
Vanguard. No load, low cost. Broker-sold funds simply eat away at your hard-earned wealth.

Buy into one of their index funds, too. They have ultra-low operating expenses and they can't screw up like actively-managed funds can.

If you want an index fund, then yea, go no load. As long as broker fund is outperforming an index fund, than the fees are worth it. Besides, no load funds still build their operating expenses into the fund, so it's not like you are getting something for free.

Over time, index funds do better than a majority of actively-managed funds. And that's before you even look at loads and fees.

Look at Vanguard Total Stock Market Index. It's ranked in the top 25-44% over a wide range of time frames. If you pick an actively-managed fund, there's a better chance than not that you'll pick a fund that does worse than the cheap index fund.

It's not uncommon to pay a 4.5% sales load for an actively-managed fund that has a 1.5% operating expense. When you buy an index fund from Vanguard, you pay no sales load and you buy into a fund that might carry a 0.25% operating expense. These funds really are gifts to self-directed investors.

These funds are for people who don't know anything more than to pick an index or don't want to pay for expert advice. I honestly don't care what he does. Index funds aren't always that great.

Ripped from Yahoo!
Performance of VTSMX
Year to date, Vanguard has lost 5% more than the S&P 500. I'd rather pay 4.5% sales load than lose 5%. Atleast I'd be up 0.5%. Look at the fund's five-year average. It has consistantly lost money to the tune of 1.37% per year. Looks like if you put money here, you can start watching it go down. Not to mention that Morningstar only rates this fund with 3 stars. If you're not going to pay anything, you might as well get find 4 start Morningstar rated fund.

VTSMX has actually lost 24.38% YTD. However, its performance places it in the 36th percentile, which means roughly 2 out of 3 funds have performed worse than this simple buy-everything-and-hold fund. It's never going to be a top-10% fund year-in, year-out. That's not the point of index funds. Index funds keep you out of the basement. You are better off missing out on a huge, abnormal gain than you are taking a huge loss.

I read Morningstar but their star rankings don't hold a lot of water with me. Take a fund like Berger 100 (renamed in 2000 to Berger Growth). This fund had a remarkable string of price appreciation, returning around 16% annually for a period of 15 years or so. But like the old adage goes "past performance is not an guarantee of future results", which applies to this Berger fund in spades. In the past 5 years this fund has returned -10.83% annually while the S&P 500 returned 0.28%. An unbeliveable shift of fortunes.

My IRA has two funds: Vanguard Total Stock Market and Vanguard Total Bond Market. I'll be adding a few international index funds and Vanguard's TIPS fund. Incredible diversification for cheap.

 

[dirtboy]

I'd rather have a consistant plain gain or a low loss than a 24% drop. If you got 3.75% (which is the 10 year treasury bill today) it will take you 6.4 years to recover that loss. I am fascinated that you believe in something so strongly that has caused you such a great loss. Hopefully you are young and have time to recover that.

 

[linuxboy]

hi

as kranky said, load and management fees are part of fund expenses. What kranky forgot to say is the 12b1 or distribution and service fees charged annualy, depending on class share.

In loaded funds, A shares have an up-front charge, B shares have a deferred charge over 6 years and C shares have a deferred charge but over 1 year.

No-load funds are great, but it depends on the fund.


Whenever you're investing, use the right tool for the job. That is, the fund type and tax consequence depends on when you need the money and why.


Talk to some planners in your area and see what they say. If you're buying into loaded funds, might as well have a representative to help you.


I agree about American Funds, 40 cents out of every dollar going into mutual funds goes into American. But there are other great managers out there.

Cheers !