Mutual Funds, let my bank handle it or invest by myself?

Question

I have an account with Citibank, and I am thinking of investing in Mutual funds. Since I don't know alot about investment or about Mutual funds, should I let my bank, Citibank, handle everything for me or should I do some reasearch and invest by myself through some on-line Mutual funds?
I also want to know about fees and taxes for both of these cases.

Your help is greatly apprecitated!

Answer 1

The main problem with having someone else make decisions for your is that there is no guarantee that they will make good decisions. If they screw up it is no loss to them. It is a loss to you. Investing in mutual funds is not a real difficult task, although it does require a little bit of knowledge. But acquiring the needed knowledge is not a monumental task. The main problem that you have to deal with is that 70% of mutual funds underperform the stock market in general, so you have to be somewhat selective.

Recently to eleviate this problem, hundreds of index funds have come to market. Their goal is not to try to beat the market but to mimic the market. There are index funds for almost every occassion. So many in fact that one wonders whether many are actually index funds at all. They do have a couple of real advantages over other types of mutual funds. They have low expense ratios, sometimes very low, and they are very tax efficient. That is since they are not continually buying and selling stocks they do not have realized captial gains that they have to distribute at year end and upon which one must pay taxes.

Many index funds are traded like stocks. You open an account with for example Scott Trade and place an order for the fund. Within 5 minutes you own the fund. When you want to sell it, you place an order to sell the fund and 5 minutes later the fund is sold. Total cost of the round trip $14.00. Other on line brokers are slightly more expensive but not much.

All open ended funds can be purchased directly from the mutual fund company. If they are no load funds, there is no cost to purchase the fund. Many however do charge a fee of about 1% if you sell the fund within 30 days of purchasing it. If the fund has a front end load there is a fee of about 5% to purchase the fund. However, in general front end loaded funds have much lower expense ratios than no load funds.

There are a lot of books available that will help you learn about investing in mutual funds. Regardless of what you decide to do you should nevertheless inform yourself on this subject.

Here is a list of suggested readings:

Mutual Funds for Dummies $13.97 at Amazon sort of an introduction to mutual fund investing

Common Sense on Mutual Funds: New Imperative for the Intelligent Investor John Bogel $13.57 at Amazon

The Intelligent Asset Allocator: How to Build Your Portfolio to
Maximize Returns and Minimize Risk William Bernstein $19.97

The Morningstar Guide to Mutual Funds: 5-Star Strategies for Success $11.53

For less than $75.00 you too can become an expert on mutual fund investing.

Answer 2

If you dont have the time or skill to do it, let someone else handle it. Check what Citibanks fees are to handle your portfolio and then shop around. Look for a fee-only advisor. One who charges for their time, and not by commission by selling financial products. A fee only advisor will either charge you by the hour and make recommendations that you can then carry out on your own. Or charge you a percentage of your portfolio to handle it continuously. That way the more money you make the more money the advisor makes. The less you make, the less the advisor makes. The fees for continuous managemen should be 2 percent or less of your portfolio. An hourly rate may cost you a couple hundred dollars per hour.

Answer 3

Most banker will encourage you to invest in loaded funds. They make money with commissions. You can hire financial planner that charges by consultation not by commission.

Before you start, try this book. It will save you a lot of money.

Common Sense on Mutual Funds: New Imperatives for the Intelligent Investor - John C. Bogle

Good luck!

Answer 4

You should educate yourself about mutual funds whether you use your bank to give you advice or you invest your money on your own.

Answer 5

You should learn how to invest by yourself for your protection.Do not let anyone step over the boundery because it is your money

Yes you could learn invest by yourself. it is your money, you should know how to do with it. for starter check this site out.

http://www.pathtoinvesting.org/index_fla...
http://www.stockcharts.com
http://www.streettalklive.com>... university. a lot amount of information. It will serve you well
I accumulate in good amount in 401k at the young age.I could share with you. when consider invest in stock market. you should consider basic 3 things:

fundamental analysis==(economic data,finincial health, management, business model, competetion)>>what to buy

technical analysis==(chart+indicator)>> when to buy

Sentiment/schycho analysis==>>mood of investor, Contrarian point of view.
Market cycle===>> check out book Trader Almanac by jeff hirsch will give you inside stuff
When you combine 3 thing, It is one of the powerful knowledge goinh with you for the rest of your live

At the age of 32. my 401k is amassed 73,000.00 and 30000.00 in taxble account. by follow simple rule

Answer 6

Money is something you can't afford to let others handle for you. Learn it, seek advice about it, but almost make your own judgement.

Answer 7

look at this,

http://www.bernanke.cn/what-is-a-mutual-fund.html

it may help you.

Answer 8

yourself