What mutual fund should I invest into with my money?
I am 18 and I want to use some saved money and contributions from my graduation party to buy into some mutual funds for about 5 years. Most likely, I will have between $3,000-$5,000 to invest. I do not have a large knowledge base in finance, but i know some basics. I would like some opinion on these funds please: JGYAX, YACKX, and TILDX. Thank you in advance for the help!
Frankly, none of the 3 you mentioned have much appeal…the first is more income centered, but with really high sales commissions and 12b-1 fees that will pickpocket you right before your money starts working for you. The second is more capital centered, and geared for long term growth of your money. But you say you only want it for 5 years, which is the bare minimum for a stock investment. The last one is the most balanced, with no loads and no 12b-1 fee, but has a big expense ratio, again being a leech on your earnings.
Aside from learning to avoid the "Big Money Fast" hype that is basic common sense and seemingly in very short supply among investors, one of the most important things you need to learn is that *what company* you use to invest is extremely important – especially the longer you have money in the market.
Start with some basic books to teach you the fundamentals. Two excellent reads are The Complete Idiot’s Guide to Investing and Investing for Dummies. You can probably borrow them from your local library. Before doing anything, make sure you have enough in savings in case things go south for at least 6 months if you’re on your own.
You need to learn also some important concepts in investing, such as dollar-cost averaging and compound interest – two of your best friends to make money for the future.
You first need to pick a company to invest through. Some of the best are Vanguard, T. Rowe Price, Fidelity, and Schwab. Avoid the big banks like the plague. Don’t let them rip you off with loads (sales charges) and fees. Check how much the company charges you as an expense ratio. A good one might charge you 0.2-0.8 %. If they charge more than 1% than go somewhere else. And if they charge any kind of 12b-1 fee, hold on to your wallet and RUN.
The question you need to answer is WHY you are investing. Different people have different goals. Is it for more income? For retirement? For someone’s education? Plus how old are you and how long do you want to invest? How much risk are you willing to assume?
These are all very critical questions and they will determine what kind of investments are right for you. Don’t believe anyone who has a "one size fits all" kind of investment. For stocks typically you are talking about at least a 5 year investment period. If less, consider getting into bonds or a bond fund instead. Many people choose an appropriate mix of the two.
For more information, try looking at
https://personal.vanguard.com/us/funds/vanguard/all?sort=name&sortorder=asc
and play with it, comparing funds with more or less risk.
Do some reading online such as
http://www.vanguard.com/us/insights for some important investment truths.
Especially how high costs, expense ratios and so on can rob you of tens or even hundreds of thousands of dollars over time.
Of course you will have a lot of immediate needs for you money in your near future, but if you can,
saving up even just a little for retirement will serve you well. The more time you have, and the more money you can amass together with a wise investment. Consider a Roth IRA after you earn some money from a job. Your money grows tax free, and when you retire you can withdraw it tax free as well.
Best of luck!
Frankly, none of the 3 you mentioned have much appeal…the first is more income centered, but with really high sales commissions and 12b-1 fees that will pickpocket you right before your money starts working for you. The second is more capital centered, and geared for long term growth of your money. But you say you only want it for 5 years, which is the bare minimum for a stock investment. The last one is the most balanced, with no loads and no 12b-1 fee, but has a big expense ratio, again being a leech on your earnings.
Aside from learning to avoid the "Big Money Fast" hype that is basic common sense and seemingly in very short supply among investors, one of the most important things you need to learn is that *what company* you use to invest is extremely important – especially the longer you have money in the market.
Start with some basic books to teach you the fundamentals. Two excellent reads are The Complete Idiot’s Guide to Investing and Investing for Dummies. You can probably borrow them from your local library. Before doing anything, make sure you have enough in savings in case things go south for at least 6 months if you’re on your own.
You need to learn also some important concepts in investing, such as dollar-cost averaging and compound interest – two of your best friends to make money for the future.
You first need to pick a company to invest through. Some of the best are Vanguard, T. Rowe Price, Fidelity, and Schwab. Avoid the big banks like the plague. Don’t let them rip you off with loads (sales charges) and fees. Check how much the company charges you as an expense ratio. A good one might charge you 0.2-0.8 %. If they charge more than 1% than go somewhere else. And if they charge any kind of 12b-1 fee, hold on to your wallet and RUN.
The question you need to answer is WHY you are investing. Different people have different goals. Is it for more income? For retirement? For someone’s education? Plus how old are you and how long do you want to invest? How much risk are you willing to assume?
These are all very critical questions and they will determine what kind of investments are right for you. Don’t believe anyone who has a "one size fits all" kind of investment. For stocks typically you are talking about at least a 5 year investment period. If less, consider getting into bonds or a bond fund instead. Many people choose an appropriate mix of the two.
For more information, try looking at
https://personal.vanguard.com/us/funds/vanguard/all?sort=name&sortorder=asc
and play with it, comparing funds with more or less risk.
Do some reading online such as
http://www.vanguard.com/us/insights for some important investment truths.
Especially how high costs, expense ratios and so on can rob you of tens or even hundreds of thousands of dollars over time.
Of course you will have a lot of immediate needs for you money in your near future, but if you can,
saving up even just a little for retirement will serve you well. The more time you have, and the more money you can amass together with a wise investment. Consider a Roth IRA after you earn some money from a job. Your money grows tax free, and when you retire you can withdraw it tax free as well.
Best of luck!
References :
The answer is NO to any stock mutual funds when your time horizon is not at least 7-10 years.
Then you should look to low cost index funds from a company like Vanguard where reinvesting dividends and interest and periodically rebalancing among funds will cost you nothing.
References :
Based on your choices
I don’t like JGYAX, its worst year outweighed its best year
I like the second one’s holdings, YACKX , ko pepsie, conoco, nly, consumer heavy….
The third one is good but its holdings are heavy on financials,which may be very good in the long term and it holds alot of cash which is good, hard to compare Mid cap to Large.
References :