I鈥檝e taken a look at ING Direct mutual funds, but I鈥檓 unsure if there are a good option or not; or if there are any other better than ING Direct.
At this time I鈥檓 unable to put a large amount of $$$ towards a mutual fund, I can at least put in $200 a month. 鈥?any ideas? Mutual funds are appropriate for some and the wrong investment for a 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 reported this week the latest # 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.
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.
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!
See Amex.com (american stock exchange) or ishares.com, holders.com for more info.
Next, open a ROTH IRA. Whether you go with mutual funds or ETFs, put it into a ROTH IRA account so it will grow tax free. This is an important step that will save you a LOT of money.
You need to invest for yourself. If you can't, then sure, use mutual funds (see link below for more info). 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!
Info on mutual funds
http://beginnersinvest.about.com/cs/mutu... The socalled best answer is totally opposite of reality.
Many funds outperform the market consistantly, though not constantly.
My own funds have avged a min of 12% and a max of 38% with the usual % of around 18%. Report It
Btw, some of what he said is nowhere near factual.
Many many many funds dont have the 100's of millions yet perform & grow..
Yada yada probably wanting u to buy his stuff instead of reality. Report It
Good idea about ira's (roth or traditional or both).
But u can view the results for yourself on the internet and see what performs as what.. Report It
I'm not an expert, but based on my experience MF's are not the best route to invest, seek alternatives. I invested with FIDYX in '93 and it has been doing me great ever since I use sharebuilder.com.
I read this article about six months ago and have been following his steps: http://moneycentral.msn.com/content/Inve...
so far, my return has been about 7% which is very good. Really a hard question to answer. I disagree that mutuals are not the way to go. I've had them for 15-20 years. Just try to deversify. Don't lump everything into the same risk catagory. If you can get into a deferred compensation program through your employer your $200 a month if put into the right mutuals could multiply quickly. Anything from Fedelity would be a good investment. I would suggest no-load or low-load funds. At your age growth and aggressive growth funds would be good to start with. American Centry, T. Rowe Price, Icon and Vanguard are good companies. If you sign up for automatic monthly contributions some companies will waive the inititial investment minimum. $200 a month is a great start!
Select a no load mutual fund with a low maintenance cost. Anything over 1% is too high.
The prior post recommending a growth fund is a good suggestion.
Choose a fund from a fund family that has a variety of offerings. This will be useful to you as your holdings grow and you find you need to reallocate your investments.
I recommend the Vanguard group, because of their variety of offerings and low cost. https://flagship.vanguard.com/VGApp/hnw/...
I am not familiar with the fund offerings of ING direct, so I cannot comment on them.
You can use Morningstar to compare the costs and investing styles of different funds. http://www.morningstar.com/Cover/Funds.h... |
