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How much shud a starter invest in mutual funds and how safe they are?


How much shud a starter invest in mutual funds and how safe they are?

Safe... It depends on you're goals, time horizon & the stated goals of the mutual fund. The S&P500 Index (the benchmark for many mutual funds) can go down 25% or more at a clip. But, over the long term this type of "unmanaged" fund beats 80% of all mutual funds (over 10 years and more).

First bottom line;
NEVER (ever) INVEST IN SOMETHING YOU DON'T UNDERSTAND!
Know why you're investing in something. Know exactly what the risk is. I've gone through periods where some of my funds have gone down more than 30%. This was to be expected & time has made that 30% loss disappear into a nice profit.

Read some books. Learn (& understand) terms like;
Asset Allocation
Large Cap, Mid Cap, Small Cap & International.
Growth & Value

Take your time to learn. I've done very well for myself & family by prudent investing (with understanding).....

Don't go into a stock mutual fund unless your "time horizon" is over five years.

Do not call or follow any leads to a broker or mutual fund company found through postings on this forum (unless you already know through other research they're legit).

Good luck!

there pretty safe and a smart way to go.. the amount depends on what you can afford.. 500.00 is a good start.. but you have to keep investing in it

You can start with any amount but it's a good idea to put money into it regularly.

Depends on what your investment goal is (how much, by when), your risk appetite and what investments are available to you. Generally, the higher your investment goal, the lower the risk you are prepared to take, the more you need to invest as returns are typically less for less risky investments. Or if you want a high amount, are prepared to take a more aggressive approach (more risk) you can invest less. But you will have to understand that risk means there is a greater chance you might not meet your goal. It also depends on your time frame. The longer your time frame for investing, the better you will be able to ride out market volatility (the rise and decline of the market). There is a big difference when you have 30 years to invest compared with 5 years.

Safe? Stick with well known fund groups and you can't go too wrong. Newer fund groups might sound sexier, but you need to know who is managing the money, their background and if available any big backers. You would do well to research index funds if you are not familiar with funds as it has been observed that many money managers are unable to consistently beat the market benchmarks. Index funds have the advantage of lower costs as there are fewer resources required for fund management.

You can also increase the safety factor by reading more about investments and managing your money. Investors like Warren Buffett have not generated a huge following for nothing. The best thing is you can begin with some of his annual shareholder letters which are available free online. Read by many investors, the letters give clues behind his thinking and should help any investor get a little more savvy with their investing.

Best of luck!

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