How to invest in Mutual funds?

Question

I was looking in Vanguard there is a Windsor II fund and a Wellington Fund I don't mind investing in but is it worth it? I see over a 10 year (97-07) that you have the potential of double in each....the risk has low flucuations... but i mean what will an initially 20K to 40K be worth? In other words, what will 40K be worth in 10 years?

Answer 1

Vanguard offers no-load low-cost stock mutual funds that you can estimate to average about 10% a year. (adjusting for inflation, ~7% a year.) If you invest 40K for ten years, that theoretically works to ~105K. (adjusting for inflation ~80K.) However, there is great variability in how stock do from decade to decade. You might end up with 50K or 150K.

Wellington will give you less increase in value, because it invests partially in bonds. However it will give you a smoother ride. Some people can't stand the volatility of a 100% stock fund. Take the Vanguard investor questionnaire to see how much you should invest in stocks vs. bonds.

Answer 2

Nobody really knows what 40k will be worth in 10 years. Don't "steer the boat by looking at the rudder". Above all, Do not buy last year's high flyers. Buy No-Load mutual funds. That way, you don't pay any commissions, and all your money goes to work for you. Look for funds that have low expense ration and no 12b-1 fees.

Diversify by gradually investing in Large cap Value funds, Large Cap Growth funds, and mid cap funds as well. Also invest in global funds. I suspect that Windsor II and Vanguard are good funds to buy for the long haul

Also look at T. Rowe Price funds and at Dodge & Cox funds. Shop around!
Good Luck

Answer 3

Mutual funds are good for investors who don't know where to invest, but they know the industry they like. Such as, I wanna invest internationally, but don't which companies. I like that quote about the boat mentioned earlier. Never look at what you money could be worth, because then you will be worried about losing money. If you don't hit your goal you'll be pissed. With that being said, from my own research,

Hopeful returns:
Domestic:
Large-cap - 7-12%
Mid-cap - 10-14%
Small-cap - 13-17%

International - add about 2-4% for each
Then you can get into more sector funds. Thats a whole new ballgame because they can be very volatile. You better know the industry you are investing in.

As you see the higher the risk the mutual fund, the better returns HOPEFULLY!! just like any investment the more risk, the higher chances of loses.

Cons of investing with mutual funds. You are giving your money to a fund manager who will do the investing for you. If he beats the indexes (which is quite hard) he gets a bonus, but if he loses you money he STILL makes money. You take all the risk.

If you still like investing in mutual funds. Companies such as Vanguard, T. Rowe Price have generally no-load funds, and low expense rations for each of their funds. My own exp I have always liked Morgan Stanley funds as well.

Answer 4

an idea return from a mutual fund is 7 to 12 % on average. If you want to double your money soon, I suggest maybe looking into a a couple of stocks that are large caps like GE, AT&T, Disney etc.... To me I feel that mutual funds are expensive with their fees and the return isn't that great. Remember to diversify when you invest in stock... Well thats my opinion...

Answer 5

Derek, do not let these mutual funds companies convince you of their "wonderful record" - I hate this " for the long run " stuff /
Check companies that have been paying dividends for years -
That have a sustained ( even small ) record of growth -
You will do better by chosing three or four in different sectors of the economy in order to diversify -