What's the most effective way to gain confidence in investing in mutual funds?

Question

What's the best mutual funds for a time like today?

Answer 1

There's no reason not to have confidence in mutual funds. It's just you and a bunch of other people ganging up in this fund to buy a bunch of stocks and bonds. Each fund buys different ones.

A good fund for basic investing is one that is well diversified, having many different types of stocks, bonds, etc. A good fund also has low expenses and no loads (commissions).

A good fund to start with is the Vanguard STAR fund. These are good investments for anytime, however you shouldn't invest unless you plan on letting it sit there for several years.

Answer 2

You've asked two very different questions. It's easier to answer them in reverse order.

The "best" mutual fund for today depends, as always, on your investment goals, your time frame, your appetite (or not) for risk, your level of financial sophistication, the amount of time and energy you can devote to money management, and other factors. There's no simple answer.

As far as gaining confidence, start with something simple. Try an index fund, or a lifecycle/target date retirement fund. These funds are comparatively easy to understand. After a few years using funds such as these, you may feel more comfortable trying something more esoteric.