English Deutsch Français Italiano Español Português 繁體中文 Bahasa Indonesia Tiếng Việt ภาษาไทย
All categories

What are your thoughts on Mutual Funds and are they a worthwhile investment? Do they deserve to be a large part of your overall portfolio?

2006-07-08 01:42:33 · 3 answers · asked by Pissed001 1 in Business & Finance Investing

3 answers

There are two big negatives to mutual funds: fees and taxes. These negatives are significant enough to make me want to avoid mutual funds entirely in most cases. However, there are mutual funds that have extremely low fees and generate very little tax liability.

The most natural alternative to mutual funds are exchange-traded funds (ETFs), which, like mutual funds, give you ownership in a basket of stocks. ETFs generally have much lower fees than mutual funds. Many ETFs are also fixed baskets, as opposed to actively traded portfolios, so they generate little or no capital gains distributions (and are therefore more tax-efficient).

ETFs trade like stocks, so you pay a commission each time you buy. So if you are going to make small, monthly purchases, no-load mutual funds are probably cheaper. The single best reason to buy mutual funds is dollar-cost averaging, or regular purchases of fixed dollar amounts (such as $100 per paycheck or $250 per month). If you are going to make one big purchase, ETFs are usually a better way to go.

A few absolute rules on mutual funds:

1) Only buy no-load funds. Stock brokers will try to sell you load funds, because they get a fat commission. But that commission comes out of your pocket.

2) Watch the expense ratio. The best are index funds, with expense ratios often well under 0.50%. Actively managed funds, which I don't recommend, generally have expense ratios from 1% - 2%. If you must buy an actively managed fund, don't pay more than 1% for domestic stock funds. That expense ratio is coming out of your pocket, and a little difference adds up to a lot of money over time.

2006-07-08 02:13:21 · answer #1 · answered by W.C. Varones 2 · 0 0

The most important thing in investing is an "asset allocation". How you get there may or may not include Mutual Funds. It's strictly a question of time & understanding.

If you have the time and knowledge to pick your individual investments... you should (it's cheaper and many times better). If not...... mutual funds are an excellant alternative.

I have about 30% of my retirement funds in Mutual Funds. The balance are in individual stocks and ETF's. This works for me. The real question is.... what works for you?

Lear about asset allocation. That's the most important issue before expolring whether to use mutual funds or not.

2006-07-08 02:08:30 · answer #2 · answered by Common Sense 7 · 0 0

the federal government waste greater funds than the internal maximum sector. I as quickly as worked for the federal government and that i observed plenty waste and human beings that could come to the development yet did no longer no longer something all day. i could no longer stand in view that maximum of human beings have been employed devoid of them having any duty I advise particularly 0 artwork to do. it particularly is a waste of the tax payers funds. as quickly as you have been employed and are there for 3 years you are able to not be fired. i ultimately provide up and went to artwork interior the internal maximum sector the place human beings particularly artwork for their pay. i could ought to decline on your question. the federal government is acquainted with the thank you to spend funds yet they do no longer comprehend the thank you to maintain funds. They spend all they have and greater. subsequently they do no longer comprehend the thank you to administration funds or the rustic. I consider Mike Huckabee approximately term limits.

2016-12-14 05:33:37 · answer #3 · answered by loukx 4 · 0 0

fedest.com, questions and answers