Which is the best investment method?

[geeyes123]

With lot of investment avenues in place like property, gold, shares, mutual funds, bonds, etc and with economy facing recession, which would be the best place to invest now?

[FrugalIII]

Personally, after my monthly allocation is made to my IRA and my savings, I invest in good quality growth mutual funds. I've never been a stock trader or interested in commodity trading. Bonds can be a good addition to your overall diversified portfolio if you don't expect a huge amount of profit from them.

[tmvijai]

It is a general question and very subjective. It changes according to your investment amount. My monthly budget goes towards building EF's, Regular savings, 529 plans, retirement portfolio both in sharebuilder and TR. So whether you talking about periodic investment or one time investment, your strategy should change and will not be same.

[disneysteve]

Originally Posted by geeyes123

With lot of investment avenues in place like property, gold, shares, mutual funds, bonds, etc and with economy facing recession, which would be the best place to invest now?

Far too general a question. I've got investments in everything you listed - real estate, gold, individual stocks, individual bonds, and stock and bond mutual funds.

If you are looking for specific advice, you'll need to ask a specific question.

[Broken Arrow]

Personally, I think it's best to keep your portfolio diversified with non-correlated asset classes.

From there, if you wish to tilt it with something you prefer, then that's a different story.

Overall, it's a very difficult and highly controversial question, with no readily available answers. As such, I like Buffett's "answer" the best: Stay within your circle of competence.

[Runaway Finances]

The one lesson learned through this latest economic meltdown is you have to have "diversification" among asset classes. This is tough to do when you are just starting out. Don't worry as much at what the "market" is doing. Have different asset classes because normally not all asset classes go up or down at the same time.

You can diversify your investments among several mutual funds, but if they are all stock mutual funds, then you are only diversified within the one asset class.

By the way, in my opinion, CASH is an asset class. I believe your emergency fund should mostly be in money markets, CD's and other non-volatile investments.

I disagree with the comment that "growth mutual funds" is where you should be. That is not always the case. You should be diversified across the different investment styles (growth, value, blend) and different capitalization groups (large cap, mid cap, small cap) ESPECIALLY if you don't actively watch your investments. In fact, if you don't actively monitor your investments, I believe you are better off in indexed funds. You need to watch actively managed mutual funds very closely as they WILL mess up eventually no matter how good they are. The good ones generally get back on track, but it takes them a year or two. Don't use averages when looking at performance. Look at their year by year performance, and compare them against the S&P 500 Index to determine how well they did each year. You will find that rarely will they beat the S&P 500 Index 60% of the time assuming they have been in existence at least 5 years. I built a huge spreadsheet that imports the historical data from my Bloomberg terminal and analyzed almost 4000 funds to come to this realization.