Buying stocks now (E-Trade, mutual funds, cash, dividend)

[fopt65]

I know its best to buy individual stocks when the prices are low and you can find some "bargains". Would you consider buying shares of an S&P500 index fund to also be worth it at this time? It would be done via dollar cost averaging via a retirement vehicle with a 20 year wait until retirement.

My retirement fund is longer in cash at this time, and with the interest rates coming down, the money market funds aren't as appealing as they once were.

How defensive are you getting at this time with your investment strategy?

[bizman56]

I would choose a good mutual fund...there are many that out perform the S&P consistantly year after year...for example Franklin Founding Funds.

[ViewFromThePeak]

Originally Posted by bizman56

I would choose a good mutual fund...there are many that out perform the S&P consistantly year after year...for example Franklin Founding Funds.

The problem I see with most mutual funds is that the managers are focused only on quarterly results for job security reasons. This forces them to put in unnecessary diversification into their portfolio. That's why most funds track the S&P and other indices.

You should go into high dividend paying foreign equities you can purchase on the NYSE. Harvest Energy Trust, Penn West, etc. Most pay over 10% yield, in Canadian dollars for currency hedging. I like receiving income that's not tied to the debased US dollar.

[nitroae23]

Originally Posted by bizman56

I would choose a good mutual fund...there are many that out perform the S&P consistantly year after year...for example Franklin Founding Funds.

Most actively managed funds(about 80%) fail to meet the benchmark of the S&P 500,if you are feeling jittery about the market and think it will go down some more,short and ultra short ETF's(Exchange Traded Funds) act inversly to market performance,Ultras move at two times the market,i.e. on Friday,when the S&P was down 2.7%,Ultras were up about 5.5%,economy is on shaky ground and inflation is back,market will have a hard time making gains in the near future IMHO,good luck!

[carrot juice]

Originally Posted by fopt65

I know its best to buy individual stocks when the prices are low and you can find some "bargains". Would you consider buying shares of an S&P500 index fund to also be worth it at this time? It would be done via dollar cost averaging via a retirement vehicle with a 20 year wait until retirement.

My retirement fund is longer in cash at this time, and with the interest rates coming down, the money market funds aren't as appealing as they once were.

How defensive are you getting at this time with your investment strategy?

I would not get into the S&P500 at this time, but who knows for sure?

Find out how much money you can afford to lose first, and then consider investing in the stock market.

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[LongArm]

With a 20-year horizon, there's nothing wrong with dollar-cost-averaging (DCA) into the S&P 500 right now. DCA was made for times like these. Sure, the market may continue to go down for a while--if it does, you'll come out ahead in the long run because you'll be picking up shares at lower prices. Better to DCA than to try to "time" the bottom.

As mentioned, it's true that most actively-managed mutual funds underperform the market, so you're smart to go with an index fund or exchange-traded fund (ETF). And no, you don't need to worry about "losing your money" with a long-term investment in the S&P 500.