Best mutual funds to invest to replace CD investment?

The best way to do anything yourself is to learn something about it first. You'd be surprised at the thousands of books available on this one subject at your local library.

But most people spend more time deciding the color of their new car, than they do on a mutual fund advisor, for example.

Are you really wanting to do this yourself, or are you asking about someone who is an expert who can do it for you?

If you invest in the stock market right now, or just buy into all the ETF's you can afford, it's a crap shoot, like rolling the dice, and the odds are probably not in your favor, whether you have an expert fund manager or not, because mutual funds are always "in" the market.

They say "Buy and Hold" for the long term is better, but that depends on when you get in, and what your definiton of "long term" is. The phrase "Buy low and sell high" infers that you buy after a decline; decidedly not the case here.

The Dow is now approaching all-time highs last seen in Jan 2000, so if your long-term definition is more than seven years, then you won't mind waiting another seven years for a profit.

In my opinion, the name of the game is capital preservation. When the risks are high, like right now, you get out of the stock and bond markets and park your cash in a interest bearing money market fund or CD or Treasury Bill.

This is simply not a good entry point for investors. Be patient, wait a few months, and you'll be able to buy much more stock a lot cheaper, the risks will be lower (even though they will seem higher), and your chance of success greater.

If you wish to research the 鈥淏uy and Hold Strategy鈥?further, or perhaps trade yourself, I recommend two book titles. One is called "Which Is Better, Buy-and-Hold or Market Timing?" The other is "Do You Have What It Takes to Be a Market Timer?" They will give you plenty to think about.

Municiple Bond funds....tax free interest. Or, the Davis New York Venture fund for stocks.

Lately the trend is to use stock index funds instead of normal managed mutual funds. Stock Index Funds match the perfomance of the major index they are based on and have a better historical record of outperforming the majority of mutual funds...and at a lower cost to investors than normal managed funds. A newer option that is usually even better is owning Exchange-Traded Funds (ETF) which can be purchased and held like stock but also give investor the stock ownership diversity of a mutual fund. Take a look at ETFs based on the S&P500 index for example (see symbols SPY or SPX). A S&P500-based ETF offeres most of the advantages of S&P500 Index funds but with more liquidity, less fund expenses. And ETFS are optionble (unlike mutual funds).
Since ETFs are purchased, held, and sold as stock shares, you must pay a stock broker commission on transactions, but the one-time commission costs in most cases will be lower than a mutual fund's entry/exit and ongoing management fees.

It depends on your risk tolerance. If you don't mind a bit of risk and you're holding on for the long term, an index fund isn't bad. If you want to stay with a similar risk profile, then there are money market funds out there. A bond fund would be in between.

Search on www.morningstar.com for the particular fund you want.