Comments on: It’s all in the comments

By: MLH

MLH — Wed, 05 Apr 2006 15:59:00 +0000

Hurray for looking for investment opportunities! Take your time with the research–you will definitely feel more comfortable in the end if you spend the time researching now. Hubby, especially, and I spent several months learning about investment opportunities and mutual funds, and then more time researching the mutual funds themselves, before investing. That research has paid off in peace of mind as well as in interest!

By: Ray Chiang

Ray Chiang — Wed, 05 Apr 2006 05:30:00 +0000

For getting started investing with small amounts of money, I highly recommend the following:

1) Stick to no-load mutual funds with low expense ratios. Families like Fidelity and Vanguard offer a good variety.

2) Read up on dollar cost averaging. Combining this with index mutual funds (like Vanguard Total Stock Market Index) is the a great way to get started.

3) If you don't want to invest too much money at once, then look around for the lowest initial investment and some low regular investment (like $50 per month or per quarter). There's nothing wrong with starting small to get comfortable with the idea first. The sooner the better.

4) For stock index mutual funds, invest whatever your comfortable with having socked away for a long time (at least 5 years, 10 years is better). Use cash, savings, CDs, and money market mutual funds for more short-term emergency stuff.

Good luck with your decisions!

By: Anonymous

Anonymous — Wed, 05 Apr 2006 01:15:00 +0000

New reader here, but you remind me of where I was just a couple of years ago. I could not stand the thought of my hard-earned money going down the tubes in a “volatile” market. I was inexperienced and totally out of my league so I decided to go to the “experts” and buy mutual funds. I have since learned that MOST of these fund managers lag behind the market! And what’s the difference between picking between thousands of stocks or thousands of mutual funds? Therefore, why not just buy the market? Why pay a high MER on poorly performing funds? That’s a double insult. I suggest buying ETFs (exchange traded funds). They are a basket of stocks that mirror a certain index (S&P 500, Dow Jones, etc.) They charge a pittance of an MER, since it doesn’t take rocket science to copy the stocks of the tracked index. This is called passive investing vs active investing of fund managers who pick and choose stocks. However, a large majority of mutual fund managers are closet indexers anyway so why pay the high MERs for doing nothing? Granted, some fund managers outperform the market, but again, how do you choose between thousands of mutual funds? Also, when you are checking out the prospectus of a mutual fund, look at the comparison of between the fund vs the appropriate index. For instance, it doesn’t make sense to say a US small growth fund outperformed the S&P 500. That might be fine, but how does it really compare to the Russell 2000 that tracks the smaller companies? Maybe the Russell had a banner year and that small growth fund was just average comparatively speaking. Anyway, just giving you more food for thought to add ETFs in your things to look over!

By: nicole

nicole — Tue, 04 Apr 2006 23:05:00 +0000

I totally agree with the people who have said you need to know where your broker’s commission comes from. Additionally, I think if people are going to invest in stocks, they need to make sure they understand why their broker is suggesting a particular stock, and only invest if they believe in the company and it’s product or service. My husband’s cousin is our investment guy, and he’s suggested we buy lost of different companies stocks, all out of the right motives, but we averted two potential losers (including World Com) because we took the time to look at the companies and decide if we really feel like they are the right places for us to invest our money. My dad sells mutual funds, and we look at his advice just as closely. Even though our personal brokers have our best interests at heart, we still don’t want to feel like anyone talked us into buying anything we didn’t really believe in.

Anyway, best of luck, and the sooner you get started investing, the more time you have for your investment to grow!

By: jenn2ifer2

jenn2ifer2 — Tue, 04 Apr 2006 20:54:00 +0000

This article from money magazine posted on CNN.com really helped me. In the last section of the article it has a section “what not to do with your money,” and in it I bonds are listed. I know you said you’re already headed away from the I bond direction, but overall this article helps give really detailed information about people in the same stage you and I are currently in with our finance level and knowledge. Hope it helps.

http://money.cnn.com/magazines/moneymag/moneymag_archive/2006/04/01/8373374/index.htm

By: Jonathan

Jonathan — Mon, 03 Apr 2006 19:10:00 +0000

To be honest, I think you should go with a All-In-One fund like the symbol VTIVX by Vanguard. It automatically rebalances and adjusts based on your retirment horizon. It's far from perfect, but I think it's very easy to do worse by simply picking various funds based on magazine covers and such. I've done lots of reading on this and I still considered it when doing my own portfolio. For more info, check out my post Just One Fund.

By: Anonymous

Anonymous — Mon, 03 Apr 2006 19:03:00 +0000

I think that Bonds have a place in a portfolio, including a young one. I am 28 and own some I Bonds-If you ever need it the money is there. Although I Bonds might not give the best return it is better then a traditional savings account and is locked away, for me I need it a little difficult to get to or it will be gone. Sometimes thinking outside the box is not the worst thing!

Go buy some I-Bonds and enjoy that the money will always be there! That is what I have to say.

By: LAMoneyGuy

LAMoneyGuy — Mon, 03 Apr 2006 16:00:00 +0000

Hey Nicole,
I have a couple of posts that you might find helpful: Is Investing Risky? What is Risk? and The ABCs of Mutual Fund Loads.

If you are going to invest in mutual funds, be sure to understand the totaly expenses.