If I have $5,000 and I can contribute $100 a month...?

Question

where is the best place to put my money? i read an article saying that mutual funds aren't necessarily the best place to put your money bc of all the fees.

Answer 1

Depends upon a lot of factors. For example, your tax bracket, your age, your plans for this savings (retirement? home? college?). How savvy are you to the stock market? How comfortable are you with risk?
Long term, you want diversity in your portfolio. that protects you from any violent swings. You should have a variety of stocks and bonds, that emcompass several different industries, and perhaps different countries as well. You would do well for example to have a portfolio that was 55% stocks /45% bonds, with 20% of the stocks in hi-cap hi-dividends, 40% in mid-caps, and 40 % in small caps. Then divide your bond portfolio between blue chip, Federal, and tax free muni's.
the advantage of a mutual fund, is it allows to have a diversified portfolio that is professionally managed by people that know what they are doing. I suggest you start by placing 1/2 your 5k in a mutual fund, and 1/2 in a self managed account. Compare the two portfolios after a year.

Answer 2

ETFs tend to be better than mutual funds for lump sums (like the $5,000) are only charged one transaction fee. However, for continuous investments (like $100 a month), you'll be hard pressed to beat a mutual fund because they don't charge transaction fees.

With stocks or ETFs, the $100 a month would be eaten alive by transaction fees (even if you are using sharebuilder $4 trades because that is a 4% instant loss on your investment).

The best way to avoid fees with mutual funds is to buy a no-load fund directly with the fund company or with a discount broker that has no-transaction fee funds.

Answer 3

Try a DRIP, which allows the purchase of shares below market price over long periods of time. Contact a Fortune 500 company or your own to see if it offers a DRIP.

Good luck.

Answer 4

Call an investment firm.