Please give me financial adivice on investing in the best performing mutual fund.?
by gcadmin on Sunday, December 11th, 2011 | 4 Comments
The money at my disposal is very small;you may even call it peanuts.But still i want to tuck it away in a M.F. for future safety.You can take my risk appetite as 50 %;so a balanced fund may be desirable and it can be long term.The key point is that it is all so confusing with so many players in the market and so many schemes;who has the time to analyse?It is a virtual maze.But safety is a must as it is my blood,sweat and tears.Also. the Finmin is driving us to the wall with all avenues closed for tax exemption and this is the only way.I am not Sergei Bubka;so help me to do a pole vault with caution and without self-injury.
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If you don’t have a lot of time to analyze and do research and you want low risk, you need to think diversification. An S&P 500 index fund would do this for you. In this type of fund, you are basically investing in the overall market and the value of that investment would go up and down in tandem with the market. If safety is your primary concern, go with a government bond fund.
As far as returns, most people judge funds based on past performance even though it has been shown time after time that past performance is not a good predictor of future performance. It’s like driving your car while looking in the rear view mirror. The question you should ask is not how it has performed in the past but how will it perform in the future? What is it invested in? Index funds may have performed well in the past, but what is the outlook for it going forward? Most people judge by past performance, however, because they have nothing else to go on.
The key is to pick a fund with the lowest fees. This gives you the best chance to make a decent return. The fees that these funds charge you eat into your return like you wouldn’t believe. Vanguard is pretty good in this regard as well as American Funds.
I would probably recommend that you look for a bond index fund with the lowest fees you can find.
1) hackey245 (above) gave excellent advice. However, I think I can improve on it:: bonds may not be the best choice in that the inflation rate exceeds the return rate (plus fund expenses, plus fed/state income taxes). Go with Vanguard Asset Allocation (or American Funds equivalent) for balance and safety.
2) You may have to save until you have the minimum amount to open a Fund account.
I have several.
UMREX
UMESX
EUROX
Morningstar is always a good start.
Check out the fees associated with a fund. Know your expense ratios.