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What are your thoughts on mutual fund investing? I've always heard that solid well-managed stock funds are best when interest rates are low or trending lower, and having a higher mix of bond funds is good when interest rates are high, or are already high but trending lower.
What about when interest rates are low and will start climbing. All I know is to stay the heck away from bond funds in that case, but what type of fund will provide respectable returns when interest rates are already very low and then start slowly climbing?
What are your thoughts on mutual fund investing? I've always heard that solid well-managed stock funds are best when interest rates are low or trending lower, and having a higher mix of bond funds is good when interest rates are high, or are already high but trending lower.
What about when interest rates are low and will start climbing. All I know is to stay the heck away from bond funds in that case, but what type of fund will provide respectable returns when interest rates are already very low and then start slowly climbing?
Ok, here is the same old boring advice I always give. Buy a boring, all weather, balanced mutual fund that owns a mix of stocks and bonds. Bonds can certainly lose money, but they typically lose a lot less than stocks...and they cushion the blow when stocks get hammered.
Buy a boring balanced fund that you can stick with for decades. The better balanced funds typically match or beat the performance of large company stock indices such as the S&P 500 with less volatility.
Getting above average investment returns is more about being consistent than anything else. (In other words, it's boring).
Pick one of these funds and stay with it for decades:
T. Rowe Price Capital Appreciation
Mairs and Power Balanced
Dodge and Cox Balanced
Oakmark Equity & Income
Vanguard Wellington
When one of the above funds has a losing year, try to buy more shares if you can, even if it's only $100 bucks...Always try to buy extra shares when your fund is down. It's a little easier to do with balanced funds because they don't lose as much as pure stock funds in bad times.
I no longer put money into the market. I'm retired and will grow what I have, but no longer make money to add to the portfolio.
Want to have some long range fun? Take MysticalTyger's (That you, Ang Lee?) advice, and buy every month, but only buy in on Fridays when the market is down. We did that for years and believe we came out way ahead...
Want to have some long range fun? Take MysticalTyger's (That you, Ang Lee?) advice, and buy every month, but only buy in on Fridays when the market is down. We did that for years and believe we came out way ahead...
No, I am not Ang Lee . I think it's kind of tough to buy only when the market is down on Fridays. The market tends to go up on Fridays because of all the 401K money.
No, I am not Ang Lee . I think it's kind of tough to buy only when the market is down on Fridays. The market tends to go up on Fridays because of all the 401K money.
You know, that does seem to be true nowadays. But we've had such a runup market (I am reluctant to use the term 'bull') for so many months that I had just sort of attributed all the up Fridays to that.
But it used to go down on an awful lot of Fridays. There were very few months when I could not see a clear entry point for what I was doing. Anyway, we're glad we did it that way.
You know, that does seem to be true nowadays. But we've had such a runup market (I am reluctant to use the term 'bull') for so many months that I had just sort of attributed all the up Fridays to that.
But it used to go down on an awful lot of Fridays. There were very few months when I could not see a clear entry point for what I was doing. Anyway, we're glad we did it that way.
I think the best thing to do is just buy on a regular periodic basis and then buy extra shares when the market is down. I use Morningstar's market valuation graph. When it gets down to .90 (10% undervalues) or lower, I try to buy more shares...whatever I can afford. This worked out great for me in 2011 when one of my funds was only up 3% for the year, but I had put $700 in the fund that year on several different dates (in $50 or $100 increments) when it was in negative territory. Too bad I didn't have more to spare!
Another thing that needs to be said is that mutual funds are a little tricky if you are going to make a major purchase. It is very possible to buy a fund late in the year and get hit with capital gains as if you owned the fund for the whole year. That can hurt!
Another thing that needs to be said is that mutual funds are a little tricky if you are going to make a major purchase. It is very possible to buy a fund late in the year and get hit with capital gains as if you owned the fund for the whole year. That can hurt!
ETFs have a real advantage in that respect.
Yes, that's true. You can usually check that info on the fund company's web site. It's definitely something to be aware of as most funds make capital gains distributions in December.
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) advice, and buy every month, but only buy in on Fridays when the market is down. We did that for years and believe we came out way ahead...
. I think it's kind of tough to buy only when the market is down on Fridays. The market tends to go up on Fridays because of all the 401K money.
