2007-09-25 13:07:52 · 6 answers · asked by JOHN K 1 in Business & Finance ➔ Investing
Not enough information to give you a reasonable answer.
A common mistake is to think that having multiple funds gives diversification to your portfolio... it couldn't be more misleading, because very different "looking" funds might overlap each other and hold the same underlying securities. You can't trust the name or the profile.
If you invest in more than one fund, then the only way to ensure you are diversified across different accounts is to you a tool like Morningstar's Instant X-ray .
http://portfolio.morningstar.com/NewPort/Free/InstantXRayDEntry.aspx?tsection=toolsxray&dt=0.7055475
This requires a lot of work. A simpler way is to move all of your money into one account, which is what you are considering, and choose a single fund.
Additionally, be very, very aware of the fees that the funds charge. I *strongly* recommend that you invest your money in a low-fee index fund or an index ETF, which usually charges much less than 1.0% in fees. For example, I have a Fidelity S&P 500 Index fund (ticker FSMKX) that charges an amazingly low 0.1%.
Be wary of "actively managed" funds, because the majority of actively managed funds do not beat the market, and charge fees of over 2%.
Unless you are over 40, you are probably safe with just one or two index funds; e.g., S&P 500 (large cap) and Russell 2000 (small cap). Total market ETFs are a nice choice too. If you want to be extremely diversified, you can invest into an International ETF. I have a BRIC (Brazil, Russia, India, China) ETF. The ETF charges very low fees. No need to get fancy with sector funds. If you want to keep it simple, just invest in a single S&P 500 Index fund from a reputable fund company like Vanguard or Fidelity.
Stay away from sector funds, because they usually charge high fees, and suffer much more volatility than an index fund.
2007-09-25 16:27:03 · answer #1 · answered by Volleyball Socrates Jr. 3 · 0⤊ 0⤋
I sure hope so. I have some in mine also. But a lot depends on which ones you have in your IRA account. Like open end funds, there are some good and some not so good. One of my favorites is GAM, but there are other excellent ones also. An interesting thing about closed end funds is that many sell at significant discounts to net assets and when the market takes a tumble as it did several weeks about there are really some great bargains to be had. Discounts increased to about 18% on some of the really good funds.
One thing to keep in mind about IRA accounts, unless it is a Roth, is that eventually everthing will be taxed at the full tax rate. Therefore debt obligation closed end funds are quite advantageous in an IRA, whereas equity funds are not as advantageous.
2007-09-25 21:31:56 · answer #2 · answered by Anonymous · 0⤊ 0⤋
Five good closed end funds in different sectors, that's fine. And, you have to tell us more to give you a definitive answer.
2007-09-25 21:17:53 · answer #3 · answered by HH@20 2 · 0⤊ 0⤋
As long as you're watching your "asset allocation" and their internal fees are low.... you could be doing the "right thing". The biggest danger, as you know, is that they very rarely sell at the correct NAV. You could be paying too much or getting a great deal........................
2007-09-25 22:33:14 · answer #4 · answered by Common Sense 7 · 0⤊ 0⤋
No, put it all in penny stocks and beanie babies.
2007-09-26 00:17:56 · answer #5 · answered by Yardbird 5 · 0⤊ 0⤋
doesn't sound good at all to me
2007-09-25 20:31:27 · answer #6 · answered by Anonymous · 0⤊ 0⤋