What path to take to invest in mutual funds?

I'm 25 and have been doing good with my 401k retirement savings but want to start investing in mutual funds. also. I plan on putting about $500 a month into them. Should I pick a fund family and go directly to them to invest in and do automatic payments? I use Fifth Third currently for checking and they said they could set it all up but I worry about their middle man costs to handle this. Anyone have an opinion?

Their middle man costs should worry you. They will be significant. If you go directly to the mutual fund company, you will save a significant amount. Also 5th 3rd will attempt to sell you funds that have a front end load.

Now you do not need to buy all of your funds from one fund family. Just pick the funds that is right for you. Or you can open an account with an on line broker and buy ETFs.

For mutual funds, I like Vanguard.com, other people like Fidelity, TIAA-CREF, and DFA. Buy no-load, low-expense funds. If you are like most people you will invest part of your money aggressively in stock funds, and part conservatively in money market funds and bond funds. Vanguard has an on-line questionnaire which will give you an idea of how to do "Asset Allocation," determining how much to put in each type of fund.

I like index funds. Because of their broad diversification, you are less likely to have a dramatic drop in value. They also have the lowest expenses. For stock funds, I would suggest putting ~70-80% of your money in the Vanguard Total Stock Market Index Fund. and ~20-30% in a foreign stock index fund. However, there are many different opinions out there on what the best mutual funds are. Read the links below and form your own opinion.

Since your company offers a 401K plan at work, try to invest the most you can. Investing in a mutual fund IRA is also a good idea. If you have children, you may want to consider a 529 plan or other college savings plan that grows tax free.

If you have high-interest debt, like credit cards, it is best to pay this off first before trying most of the investment ideas above. You should also have 3-6 months of salary saved up as an emergency fund in a bank or money market fund before trying more risky investments.

Believing advice you get on Yahoo answers can be risky, so read these websites for further information. If you find it too confusing, contact a professional financial advisor at Fith Third or elsewhere. They will charge you significant commissions, however.
Sources:
http://www.vanguard.com/VGApp/hnw/planni...
http://www.fool.com/school.htm
http://sec.gov/investor/pubs/assetalloca...
http://www.diehards.org/readsites.htm
http://finance.yahoo.com/education/begin...
http://finance.yahoo.com/funds/basics

Asset Allocation Calculators
(Determining how much to put in stocks and how much into bonds and money markets is a personal decision depending on your financial status. These Asset Allocation questionaires give you a rough idea how to do this. I like Vanguard best, but try some of the other sites as well.)
https://personal.vanguard.com/VGApp/hnw/...
https://ais2.tiaa-cref.org/cgi-bin/WebOb...
http://www.ifa.com/SurveyNET/index.aspx

Web forum: http://www.diehards.org/
(Many investment web forums are overrun by scam artists. This one seems the most legitimate site.)

529 plans: http://www.savingforcollege.com

Investing in mutual funds is just about the best way for a person to save for future events like retirement and children's college. You should seek advice from a seasoned dedicated advisor. I am questioning, if I may, the experience of a bank broker in guiding you. The costs are not really the issue here. I would be more concerned about his/her experience and breath of knowledge in guiding you.

Please read my profile and call me if you would like to talk to me about this further.

Go direct with the fund family and pick only low-cost no-load funds. Vanguard and T. Rowe Price, among others, are good choices.

Hi,

Of the answers, I think Engineer's is the best. Also, check out www.moneyrec.com, designed for investment questions like yours. For everyday people with investment questions, heavy focus on mutual funds. Users are novices and pros.
Best of luck to you!
Bunny

There are better ways to invest than mutual funds. I think the term "mutual funds" is a buzz word novice investors like to use to feel intelligent.

Don't get me wrong, I own a few mutual funds, but they have been very well researched. And it is a fact that 75% of all Mutual Funds give lower returns than the market.

Your first option should be to fund fully a retirement account. If you do this, and you have extra cash, then one of the best things you can do is open a DRIP Plan.

Go to : low-cost-stock-recommendations

.com

Click on the "DRIP's" Button on the Navigation Bar

These powerful investment plans are seldom talked about because brokers make very little money when they suggest them. Yet, they have proven to be one of the best, if not the best, long-term strategy on Wall Street.

They are perfect for small investors, as well as big investors. They are safe and allow you to not care about whether the market is going up or down. They are a must for any serious investor.

If you decide you are interested in DRIP Plans, click on the advertisement on the same page "$4 to purchase stocks". This will answer your next question, which is, How do I get started? and what is the least expensive way to get started?

I strongly recommend looking into it. They are great plans.

Good Luck