18, Looking for Advice

[maat55]

Originally Posted by rennigade

What investment guarantees 12%? Let me know so I can jump on that gravy train.

I have MF's that have averaged just under 12% the last 15years. Americans funds Capital World Growth & Income fund. Go to Morningstar and look for them, you will find plenty. The New World fund is over 13% the last 10 years. I have both of these. I'm looking at plenty of other ones, just as good.

[disneysteve]

Originally Posted by rennigade

What investment guarantees 12%? Let me know so I can jump on that gravy train.

Originally Posted by maat55

I have MF's that have averaged just under 12% the last 15years.

Certainly, no guaranteed investment will return 12%, but maat55 is correct that there are numerous mutual funds that have generated those numbers over the long run. I own 2 funds, Heartland Value and Cohen and Steers Realty Shares, that have done so. Heartland has an average annual return of 14.26% since 1984 and Cohen and Steers has averaged 14.39% since 1991. Vanguard has 5 funds that have averaged at least 12%/year over 10 years (I don't currently own any of them).

So returns like that are definitely achievable by the average investor. I've owned Heartland for over 13 years so I've enjoyed that track record quite a bit.

[enorth]

Originally Posted by disneysteve

Certainly, no guaranteed investment will return 12%, but maat55 is correct that there are numerous mutual funds that have generated those numbers over the long run. I own 2 funds, Heartland Value and Cohen and Steers Realty Shares, that have done so. Heartland has an average annual return of 14.26% since 1984 and Cohen and Steers has averaged 14.39% since 1991. Vanguard has 5 funds that have averaged at least 12%/year over 10 years (I don't currently own any of them).

So returns like that are definitely achievable by the average investor. I've owned Heartland for over 13 years so I've enjoyed that track record quite a bit.

Would a MF be a good choice now? I checked out the Heartland Value and is seems to be down quite a bit over the past couple of years.

[noppenbd]

A mutual fund is always a good choice for long term investment because it gives you the chance to make much better returns than other investments, while minimizing risk (market risk is reduced by being long term, and investment risk is reduced by diversification inherent in a good mutual fund).

Buying a MF when it is down may actually give you a chance to get the funds on sale, so I would not worry about that.

The bigger problem is that past performance does not guarantee future results. In fact, recent outperformance may be a sign that underperformance is in the future. Studies have shown that it is extremely difficult to be in the top tier of a fund's peers for multiple years in a row. That is why I choose funds that have low expenses. While low expenses do not guarantee future performance, choosing a fund with high expenses will definitely cost you in the future. I use mostly index funds through Vanguard, because their expenses are among the lowest available.

[disneysteve]

Most domestic stock funds have been down recently since the broad market has been down. Some foreign funds, though, have been on fire. For example, Vanguard Emerging Markets Index was up 24.95% for 1 year and 34.53% over 5 years.

Is now a good time to be investing in stocks? Absolutely. Prices are down from their highs. The economy is struggling. If you are investing for long-term goals like retirement 20 or 30 years away, or in your case, almost 50 years away, stocks are the place to be.

[disneysteve]

Originally Posted by enorth

Would a MF be a good choice now?

Originally Posted by noppenbd

A mutual fund is always a good choice for long term investment

This is semantics, but I wanted to clarify something. "Mutual fund" can mean many different things. Many people use the term when what they really mean is STOCK mutual fund. A mutual fund, like an IRA or 401k, is just a type of investment vehicle. A mutual fund can be anything from a money market fund to a municipal bond fund to an S&P 500 index fund to a gold and precious metals fund to an emerging markets foreign stock fund to a real estate fund...

So just asking if a "mutual fund" is a good choice or just answering that a mutual fund is always a good choice really isn't meaningful. It depends on your situation and goals and on what type or types of mutual funds you are referring to.

[enorth]

Originally Posted by disneysteve

This is semantics, but I wanted to clarify something. "Mutual fund" can mean many different things. Many people use the term when what they really mean is STOCK mutual fund. A mutual fund, like an IRA or 401k, is just a type of investment vehicle. A mutual fund can be anything from a money market fund to a municipal bond fund to an S&P 500 index fund to a gold and precious metals fund to an emerging markets foreign stock fund to a real estate fund...

So just asking if a "mutual fund" is a good choice or just answering that a mutual fund is always a good choice really isn't meaningful. It depends on your situation and goals and on what type or types of mutual funds you are referring to.

Thanks for all the info!

Man... I feel like I want someone to just tell me what to do.

[maat55]

Originally Posted by enorth

Thanks for all the info!

Man... I feel like I want someone to just tell me what to do.

READ BOOKS and you will learn.

[noppenbd]

Originally Posted by enorth

Thanks for all the info!

Man... I feel like I want someone to just tell me what to do.

The first rule of investing is to understand what you are investing in. That is why you need to spend a little time learning about investing before jumping in. I recommend you take a free online "course" (really just an in-depth website) through the LA Times website called Investing 101.

Money Library - Los Angeles Times

They also have Mutual Funds 101.

disneysteve, thanks for correcting my statement. I should have been more specific and said "stock mutual funds". I do stand by the meat of my statement that in general stock mutual funds are good investments (no matter the timing) and preferable to single-stocks for most investors.

[enorth]

Originally Posted by noppenbd

The first rule of investing is to understand what you are investing in. That is why you need to spend a little time learning about investing before jumping in. I recommend you take a free online "course" (really just an in-depth website) through the LA Times website called Investing 101.

Money Library - Los Angeles Times

They also have Mutual Funds 101.

disneysteve, thanks for correcting my statement. I should have been more specific and said "stock mutual funds". I do stand by the meat of my statement that in general stock mutual funds are good investments (no matter the timing) and preferable to single-stocks for most investors.

Great. Thanks for the info. I'll try to find a little while to look at those sources as soon as possible. I recieved an Amazon gift card for graduation and might spend some of it on a couple of the books that were recommended earlier on in the thread.

My financial situation has changed considerably since I last visited the thread. Through mostly graduation gifts, I've accumulated quite a bit of cash and in total I now have around $4,000 not including my $600-700 in EE savings bonds, all of which I can afford to invest in something. Liquidity is still of little importance to me. If I was to decide to go the stock route, which stocks would you recommend I research? My dad is currently interested in NBF (Nova Biosource Fuels). What do you think about this company?

[zetta]

I would recommend that you don't start with investing in individual stocks. Starting with only $4000, you could make a few poor choices and lose it all. Instead, I would recommend either a no-load balanced fund or a stock market index fund. I don't have a specific fund to recommend, but others here might.

[jasonl417]

Roth IRA would be good. If you have been reading about them you may have found out that you can take the funds you put in, called your principal, anytime. You can not pull out interest until the account has been set up for 5 years and you are at least 59 1/2.

So you can put in mutual funds that are made up of stocks inside you're Roth. Right now the values are down so it is a perfect time. If you are dealing with $2,500, alot of fund companies have minimums that are $500, so find maybe three domestic large cap funds(butual funds that invest primarily in large companies located in the US) it is believed that these are little safer because we the strongest country in the world, then maybe take the other two $500 and find a couple of international funds that are down. The good thing about mutual funds is that each fund probably has 50-100 stocks, so this helps to off set individual security risk.

You probably do want to accumulate 3-6 months income in a money market for cash reserves. No penalties, it is stable, and you can write checks.

Thanks,

Jason

[disneysteve]

Originally Posted by jasonl417

alot of fund companies have minimums that are $500, so find maybe three domestic large cap funds(butual funds that invest primarily in large companies located in the US) it is believed that these are little safer because we the strongest country in the world, then maybe take the other two $500 and find a couple of international funds that are down.

Jason, I have to disagree with some of what you suggested.

1. While some fund companies do offer low minimum investments, they also may impose account maintenance fees on funds with balances below a certain amount, so by spreading the money over 5 funds, you may find yourself paying 5 annual fees. Until the balance is higher, it may make more sense to stick to just 1 or 2 funds.

2. There is no point in selecting 3 funds in the same asset category: domestic large cap. All that would give you is duplication, not diversification. Diversification means investing in different asset classes: large cap growth, large cap value, small cap growth, international, etc. Same goes for picking 2 international funds.

I'd rather see you do just 1 or 2 funds to start. The simplest route with maximum diversification would be a target date retirement fund. That would expose you to a broad range of investments for a small amount of money and minimal fees.

[unstop]

it take time to get rich, dont be crazy think u can get rich fast. make sure ur investment good in return and reduce the risk. too much risk is no good.

[ScrimpAndSave]

Open an ING direct account!

I heart my orange savings.