Lux Investing
Is 2008 a good time to start investing in Mutual Funds?
Alright, I am 26 years old and am interested in investing my money (Roth IRA Mutual Funds). I am a huge Dave Ramsey fan and when I listen to him on the radio, it always seems that no matter what the condition of the market, he tells people to invest in growth mutual funds with good track records. This is all good but with all of the talk to us moving into a recession, does anyone think I should stick my money into CD (currently around 5%) and invest into mutual funds at a later date? Thank you.
Public Comments
- It is always a good time to start investing, especially if you are in it for the long-term. Do not try to time the market and do not worry about fluctuations. In the long run, the market will appreciate. Since you are relatively young, I would suggest a mix of various mutual funds that have different objectives and I would invest in some funds that focus on foreign markets as well.
- Think of it this way: If the mutual funds are currently "down" because the securities they invest in are "down," then investing in them now means you are buying them "on sale." In the long term, you will realize a greater return. Invest early and regularly. Ramsey is correct. Don't try to time the market, especially with mutual funds. Think long term.
- No you are 26 you do not need to worry about day to day or year to year conditions the stock mark has always out preformed other investments in the long run so you can ether make 5% or average 11% in the long run.
- ok What is a Mutual Fund. According to wikipedia A mutual fund is a professionally-managed form of collective investments that pools money from many investors and invests it in stocks, bonds, ... There a likely to be good and bad mutual funds and they are likely to be expensive in terms of management fees. Also they are UNLIKELY to out perform the market with any cosistency and they are UNLIKELY t ob edefensive against a bear market. (Don't ask me why) Then we move to the passive funds like ETFs. I don't see why you could not construct (or get your stockbroker to construct ) a portfolio divested via ETFs which are, I suppose mutual funds, traded on the mkts and very low charges. So you chuck out the sectors you think will be having a hard time (Retailers, technology, banks?) and put in the ones you think might be OK (Oil, mining, telecoms, pharmaceutical, food/agriculture) Get the idea? You won't get it completely right but then neither do those highly paid fund/investment managers See http://www.shareworld.co.uk for global lists of ETFs and ETCs(Commodities)
- Buy indexed mutual funds... build a diversified portfolio as the first answerer said. If you don't have much money, I suggest going with Vanguard. They have a 'fund of funds' called the STAR fund, which you can open with a min of $1000. It is a made up of a diversified group of mutual funds, which keeps your market risk down. This fund is no-load and fees are waived if you pick online statements. The expense ratio is also very low, you cannot beat it with actively managed funds. Research shows that indexed mutual funds beat 80% of actively managed funds in the long run (10+ years). Only 1 or 2% of those funds come out on top after higher expense ratios and higher taxes because of the large amount of turnovers actively managed funds make. If you're worried about the market, stick your money in a money market account temporarily. Right now you make 4.55%. Trust me, 5% is not a significant difference over a period of a few months, or even a few years. You're going to want your money to be more liquid and not tied up in a CD when you feel it's time to invest in mutual funds... but it's always the right time...
