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Mutual Funds?

August 8th, 2010 | | Tags: , , , | 10 Comments | |

pen and graph

Teach Me.
I want to know everything about , what are they, how do the work, where can I buy them, what am I buying, how do I make off them, etc. Please don’t direct me to or wikipedia, I want to hear from anybody who has a broad range of knowledge.

Thanks

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10 Responses to “Mutual Funds?”

  1. Laissez-Faire Guy Says:
     August 8th, 2010 at 6:12 am

    Mutual funds are where many people’s money are pooled together to buy many different stocks. Theoretically, you could invest $1,000 and have tiny pieces of stock from thousands of companies.

    Usually mutual funds are based on some sort of investment goal. Some may seek to duplicate the Dow Jones or S&P 500 indexes. Some may be industry specific like a Transportation fund. Some may seek to invest in overseas companies. Some may even be a Total Stock Market fund. Still others may be aimed at investing in bonds or commodities. And lastly, there may be some that invest in many of the above.

    All mutual funds have management fees. Some come with sales commissions, other do not. As a rule, you want to steer towards no-load (no commission) funds with low managerial fees, so your dollars aren’t sucked away in fees, and can keep working for you.

    Some good companies with no commissions and low fees are Vanguard, Fidelity and T. Rowe Price.

    There are various mutual fund strategies. Let’s say you expect a certain sector of the economy to pick up. Maybe you think banking has had all the bad news it’s going to have, and you think things will start getting better. So you invest in mutual funds that buy bank stocks. This way, you don’t need to pick specific stocks. You can invest in broad trends.

    Another way is to use them to really diversify across many different areas, like domestic stocks, foreign stocks, bonds, commodities, real estate, etc. in a shotgun like approach. You won’t get giant gains, but then not everything can go down all at once, right?

    Lastly, if your aim is to invest for retirement, they now have targeted funds where the risk and diversification are managed based on your retirement year. You pick the fund closest to your retirement date, say "Target 2040" and then let the pros manage that for you. As you get closer to retirement date, they move towards more conservative investments so you don’t have any big losses. That’s what I do for my retirement funds. They are mostly in 2030 funds.

  2. Don Says:
     August 8th, 2010 at 6:12 am

    I will leave a source that may help you.

    I also suggest, you look at other options for investing, like ETF’s or DRIP Plans.

    Best of Luck

  3. zocko Says:
     August 8th, 2010 at 6:12 am

    go to fidelity .com and look at their investing 101 section.

  4. Don Says:
     August 8th, 2010 at 6:12 am

    Mutual funds are run by companies who hire money managers to buy different kinds of stocks in a variety of companies. Some mutual funds specialize in hi-tech industries, some in energy stocks others in international companies. These companies pool all of their stocks so that when you buy a share of their company you are in essence buying just a little bit of each of the companies they are investing in. Mutual funds are normally much safer to invest in than trying to buy individual stocks because your money is so diversified. That way if one stock goes down another might go up and your investment does not suffer. It is important to investigate a Mutual Fund company before you invest. They are required to send you a prospectus on their company before you invest, which identifies the main companies they invest in and gives a track record for the company overall. What you want to look for is at least a 10 year history with a good earning ratio. You also want to know how long their money managers have been with them. Stability is important. Then you want to make sure that they do not charge any fees (no load) or if they are really good no more than 1%. I hope this helps a bit.

  5. gosh137 Says:
     August 8th, 2010 at 6:12 am

    What you are asking for requires a book length answer so go buy "Mutual Fund for Dummies" by Eric Tyson. A very good beginner book.

  6. CFPwunaB Says:
     August 8th, 2010 at 6:12 am

    Do yourself a favor and check out YahooFinance every day, it will teach you a lot. Another great source of information is books like Personal Finance for Dummies, The Complete Idiot’s Gudie to Managing your Money, Kiplinger’s Guide to Personal Finance.

    You could also get a magazine subscription to Money, Kiplinger’s, Smart Money, etc.

    Learning the ins-and outs of mutual funds is too much to put down here on YahooAnswers, sorry.

  7. A nobody Says:
     August 8th, 2010 at 6:12 am

    You can take a look at
    MSN Money,com; ilikeinvesting.com;
    thestreet.com; fidelity,com; smartmoney.com

    You can also contact mutual fund companies themselves and they have all type of brochures or just use their websites – they’re free
    Personally I like Fidelity & Vanguard

    Good luck

  8. M!tch Says:
     August 8th, 2010 at 6:12 am

    Based on my own research, I’d suggest something other than Mutual Funds. (DRIPS, invest it yourself into stocks you research, Index fund) Mutual Funds not only do they under perform the Indexes, generally they also eat away at your profits. so you’re buying something that will be below average then you’re going to give you money back to the Mutual Fund company. For example: pg. 107 of Stop Buying Mutual Funds by Heinzl, "12% a year for 25years (an aggressive assumption) [The Mutual Fund Company] would turn an initial investment of 25,000$ into $425, 003. With a 2.95% [in fees] … the fund’s investors (you) would receive only $218, 063.

  9. Nicky Says:
     August 8th, 2010 at 6:12 am

    These days most private banks also sell mutual funds. Just walk upto any bank and ask for a mutual fund. They will not only guide you but also recomend some good funds. And guess what? This is the right time to enter the markets, good luck.

  10. davidmgorman Says:
     August 8th, 2010 at 6:12 am

    investing is a depends question. it depends on when you need the money (retirement, college, etc) the sooner you need the money the less risky the later you need the money the more risky. mutual funds give people with a smaller amount of money the ability to invest in many different companies without the risk of investing in just one. you also need to consider which class of funds a,b,c or institutional. they all have different expenses. if you are a novice investor you should invest in an assest allocation fund, this invests in many different in many different asset classes. if you are looking to make fast money you will not get it with mutual funds. talk to a financial advisor to determine your best options. try cnn/money they will give you rankings of mutual funds in many of the same ways that licensed advisors get thier information. my best advice is to be careful, dont do this on your own and dont act on emotion or rumor

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