Where should I invest my money tips mutual funds stocks?

Question

Okay, So I've got about $9000 that's been sitting in my Starone.org credit union earning 5%. Well I've just finished reading the Wealthy Barber , Richest Man in Babylon & Dave Ramsey books. They all seem to say I should open a Mutual Fund with a good portfolio manager. Can someone tell me where I can start researching this. Better yet. Can someone just list a few examples of Mutual funds I can throw some of the money in now while I research things as I go?

Any other suggestions welcome. But I'm getting tired of researching things on my own right now only getting more lost.

These are all Fantastic answers so far. keep 'em coming. Maybe I don't know any better but I was hoping If someone can be a little more specific as to what they are investing in right now. And to which Mutual Fund group and with which company. I appreciate everything so far. You are all gentlemen and scholars.

Answer 1

I hate to burst your bubble, BUT, Mutual funds are appropriate for some and the wrong investment for a increasingly growing number of people.

For me, I would NOT invest in mutual funds if it weren't for having a 401K.

Overall, Mutual funds are not good (once you're educated in investing) and many people should not invest in mutual funds unless you have to (like if it were a requirement in a 401K).

Here's why.

First of all, mutual funds exist to take average person's money.

Second, mutual funds seem to be "happy" just to do better than the S&P index, since that's often the gauge. A monkey, yes monkey, can usually outpick most mutual funds. Over 60% of the mutual funds out there can't even outperform the market (CNBC just reported the current # was 72%). That's VERY SAD!

Third, mutual funds have embedded management fees in their costs. Most of these mgmt fees are 0.5% to 2% annually. This is one of the reasons they can’t outperform the market; they take a cut out regardless of how well or poorly they do!

Fourth, most mutual funds exist not to earn you a lot of money, but are more interested in NOT "losing" you lots of money. That way you stay with them and they continue to collect their fees. Did they not highlight to you that they take this fee each and every year regardless of how poorly they do?

Fifth, mutual funds are not as liquid as one might think. If you're in mutual funds and a Bush talks in the morning and you call your broker to sell because the market is now tanking, the broker will gladly take your order, but the order will not be executed until the day is over and the negative impact is already priced into the fund.

Sixth, many mutual funds charge extra "fees" if you buy/sell their fund within a certain amount of time, meaning you must keep your money in the fund 90 days to 2 yrs before you're free from the fees (read the fine print on trying to get a withdrawal). These fees can be up to 3% or so of your money as well.

Seventh, mutual funds have to be in the market. So if the market is crashing or going down like it has between May and now, then the funds still have to be in the market and taking those losses too. With some practice, you can time your monies to avoid some of those losses (it'll take practice).

Convinced yet? Need more?

Eighth, mutual funds have to be pretty diversified and so if there are hot and cold sectors, they are probably in both the hot sectors and cold sectors. However, as an investor, you can buy into just the sectors you want, like metals, or housing, or energy, etc. or right now, Brokers/Dealers, Retail, and insurance!

Ninth, mutual funds are so big, they can only invest in certain companies. A small mutual fund with $10 billion in assets. 1% of that money is $100 million. How many companies are this big where $100 million investment isn't the whole company? Do you want to limit yourself to just those larger companies like Times Warner, Microsoft, home depot, Cisco, Ebay which have been sideways for years? I think not.

A better way would be to buy ETFs (exchange traded funds) or holders. These trade like stocks, so are very liquid, and do not have the high fees like the mutual funds. Further, you can buy/sell them as you wish. They represent sectors or indexes, so buying them gives you the same diversification as the sector/industry/index, but with much less overhead! Here is a site with some basic stuff on ETFs.

http://www.valuestockreports.com/021907.htm

See Amex.com (american stock exchange) or ishares.com, holders.com for more info as well.


You need to invest for yourself. If you can't, then sure, use mutual funds. But be aware of the shortcomings (and as you can see, there are many).

Let me know if you have further questions.

Best of luck!

P.S. Where would I invest right now. Here are a few stocks I own.
AAPL, CROX, MRO, X, POT, CI
Here are a few good ETFs, OIH, DIA, XHB
5/30/07 AM

Answer 2

You have been educating yourself with some books, and now you are keen to get started. After all time is money, and your money could do better than 5% p.a. if you find the right mutual fund.

The fool web site has some interesting comments on mutual funds and offers a premium service which will cost you $30. The information there should be sufficient to push you in the right direction.

Now mutual funds do come with risk, and they are not particularly exciting. You put your money in and after 20 years you may have a sizeable chunk of cash.

However, you could decide to split your funds putting half in mutual funds and looking for a better return with the rest.

Although this method will not appeal to everyone, a system that has returned over 49%p.a. is definitely worth a look. The Stocks Monthly System shows you exactly which stocks to Buy, When to Buy and When to Sell.

You just follow the system. If you had done exactly this for the past 15 years $10,000 would have grown to $4M. Not bad for a simple easy to understand system.

Answer 3

Yeah, mutual funds are the way to go, as long as you are looking long-term (5+ years). You could probably expect 10-12% on average from an S&P 500 index fund. I would probably split 50-50 between one of these and an international fund. As your portfolio grows, you can branch out into more funds, like small cap, real estate (and/or other sectors), bonds, etc.

Because it's much easier to keep all of your funds in one fund company, I would choose a good fund firm, like Fidelity, Vanguard, or T. Rowe Price.

Another suggestion I would give is to keep adding to your funds. All companies have an automatic investment program, where you can have as little as $50 or $100 per month deducted from your checking or savings account. You'll be amazed at how quickly that adds up.

Good luck!

Answer 4

Start with a lifecycle or target date fund. These are mutual funds where the fund management company does the work of allocating your money into a diversified portfolio of assets. Each such fund has a "target year," which is the year investors in the fund plan to retire. The fund is invested in a way that will hopefully provide a good long term return by that year. You pick a fund with a target year around the time you hope to retire. For example, if you are 35 now and plan to retire in about 30 years, pick a fund with a target year of 2035 (these funds usually have target years in multiples of 5, like 2030, 2035, 2040, etc.).

Vanguard is a low cost mutual fund management company and calls these funds "Target Retirement" funds. Fidelity is another mutual fund management company, probably not quite as inexpensive as Vanguard, but still a pretty good deal for these types of funds. Fidelity calls them "Freedom Funds."

For more information about lifecycle and target date funds, see the webpage listed below.

Answer 5

As for which mutual funds- I depend on my financial adviser to give me a list and then I look at them. I look at the track record (more than 10 years over 10%, etc). I know one of my husband's mutual funds is earning over 20%...natural resources (Go figure!). I don't have the paperwork with me but I suggest you start looking at natural resources.

Are you looking at putting into a Roth IRA if this is for retirement?

I also suggest you take Dave's advice and look up a financial ELP in your area- that is why you pay those people. I find it very frustrating trying to research this on my own. I went to school for computers not investing! So I do trust my person but I ask a lot of questions and look at his suggestions and then make a decision. It narrows the field down considerably!

Answer 6

I think you should educate yourself more on how to invest. I mean you should become familiar with the different types of investments, not just mutual funds. Try to learn as much of the terminology as you can and learn how to read financial statements. If you gain this knowledge, you will not have to ask people what they are investing in. What is good for them may not be good for you. Any investment that you don't understand is not good for you. I don't care how much money it is suppose to make. You must gain more knowledge and then stay within your realm of compentence. Tune out the outside noise and focus on yourself and you will become a great investor.

Answer 7

check Vanguard Funds. Their costs are less and they have several funds that have excellent records.