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Old 03-09-2007, 10:30 AM
 
202 posts, read 444,715 times
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Hello everyone... Thank you all for contributing the the poll on droping prices. Iwas wondering how many of you (rich or wealthy) made the switch to mutual funds or bonds yet. Historically, when the real estate is no longer a viable investment people pull out/sell off the real estate and move thier money into the stock market. My wealthy clients have told me that thier money is in bonds right now as it is a transitionary time but will be moving the the SM in the short future.

I was wondering what you thought.
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Old 03-09-2007, 12:13 PM
 
525 posts, read 2,212,173 times
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You should always have a balanced protfolio that includes, MF(both growth and income), bonds, Money-market (principal protected liquid asset), and speculative (for the LT investor. This can include spec. MF or individual stocks)
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Old 03-09-2007, 01:58 PM
 
202 posts, read 444,715 times
Reputation: 37
Quote:
Originally Posted by JustSayNo View Post
You should always have a balanced protfolio that includes, MF(both growth and income), bonds, Money-market (principal protected liquid asset), and speculative (for the LT investor. This can include spec. MF or individual stocks)
any particular you recommend?
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Old 03-09-2007, 02:37 PM
 
525 posts, read 2,212,173 times
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Well, I have been out of the industry for close to ten years, and do not know much of specific funds managers anymore. But, a general rule to find the right group and fund is :

Look for no-load mutual funds, load funds are old-school designed for the days when you had to go through a broker. The load is the brokers piece of the purchase price. No need for load funds anymore. So no-load fund

Management fees, you will find the fees in the prospectus. Every mutual fund is going to have management fees, and don't always look for the lowest. You want to look at mamagement together with performance.

Performance. You should look at perfomance carefully. This can be complicated. First, look at 6-month 1-year, 3-year, 5-year, 10-year and since inception. At the same time look to see if the portfolio manager is the same over the periods or if there have been several. Regarding performance it is VERY important to remember that the market is just like any other market. Strong periods and weak periods that have nothing to do with the Porfolio Manager. What does have to do with the manager is the choices they made during those periods. In otherwords, in strong periods you want the fund to track at or better than the appropriate market indicator. In week periods, you want the funds to track at or above as well, but remember in a
-10% year and fund that is down 6% actually did quite well. So Eventhough it is down, it outperfomed the market indicator.

Back-End Loads. There are funds that have back-end loads. These are fees you pay when you sell the fund shares. No reason to buy these funds, ever in my opinion.

As far as portfolio mix, it depends on your age and your other investments. It is critical to look at all your assets as your porfolio. Savings accounts, real estate, any other "liquid asset" such as coins, stamps, gold, silver. etc. Lets say you are in your 30-40's and your purpose of investment is strickly to save maoney and let it grow, in otherwords you are not saving for a house, a college education etc. Your portfolio at that age can take the additional risk of capital appreciation funds-your target is future growth, not current income (it would be the opposite if you were closer to retirement-rule of thumb is the older you get-the shift need to go to capital preservation and income) For Capital appreciation (CA) you want to look for funds that do not pay dividends, but can pay capital gains. Many CA funds do not pay any capital gains either as they ruturn the profits generated back into the fund for more investment. CA funds should have a range of 10years or more-they are not short-term investments. Along with CA funds, a "Common Stock" fund, with the objective of growth and income, should be included to balace the risk of CA funds. They key is diversification-don't put all your eggs in one basket.

REMEMBER, Mutual funds are taxable unless they are in a retirement account. Meaning all dividends, capital gains, and profit from the sale of shares is taxable income-that needs to be factored into the "performance" equation.

ALSO, these are guidelines and should not be considered investment advice. This is a starter for you to do your own research. In general the more risk the more reward OVER a longer period. The less risk the less reward but you have more protection of principle. NO Mutual Fund, with the exception of a Money Market Fund, will guarantee principle. You could loose everything (highly unlikely) but it is a good thing to remember that the money you invest is NOT guaranteed to be there when you need it. If you want a guarantee-go to the bank or buy bonds.
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Old 03-21-2007, 10:05 AM
 
Location: Near Charlotte, NC
405 posts, read 1,172,219 times
Reputation: 197
Quote:
Originally Posted by JustSayNo View Post
Look for no-load mutual funds, load funds are old-school designed for the days when you had to go through a broker. The load is the brokers piece of the purchase price. No need for load funds anymore. So no-load fund

Management fees, you will find the fees in the prospectus. Every mutual fund is going to have management fees, and don't always look for the lowest. You want to look at mamagement together with performance.

Performance. You should look at perfomance carefully. This can be complicated. First, look at 6-month 1-year, 3-year, 5-year, 10-year and since inception. At the same time look to see if the portfolio manager is the same over the periods or if there have been several. Regarding performance it is VERY important to remember that the market is just like any other market. Strong periods and weak periods that have nothing to do with the Porfolio Manager. What does have to do with the manager is the choices they made during those periods. In otherwords, in strong periods you want the fund to track at or better than the appropriate market indicator. In week periods, you want the funds to track at or above as well, but remember in a
-10% year and fund that is down 6% actually did quite well. So Eventhough it is down, it outperfomed the market indicator.

Back-End Loads. There are funds that have back-end loads. These are fees you pay when you sell the fund shares. No reason to buy these funds, ever in my opinion.

As far as portfolio mix, it depends on your age and your other investments. It is critical to look at all your assets as your porfolio. Savings accounts, real estate, any other "liquid asset" such as coins, stamps, gold, silver. etc. Lets say you are in your 30-40's and your purpose of investment is strickly to save maoney and let it grow, in otherwords you are not saving for a house, a college education etc. Your portfolio at that age can take the additional risk of capital appreciation funds-your target is future growth, not current income (it would be the opposite if you were closer to retirement-rule of thumb is the older you get-the shift need to go to capital preservation and income) For Capital appreciation (CA) you want to look for funds that do not pay dividends, but can pay capital gains. Many CA funds do not pay any capital gains either as they ruturn the profits generated back into the fund for more investment. CA funds should have a range of 10years or more-they are not short-term investments. Along with CA funds, a "Common Stock" fund, with the objective of growth and income, should be included to balace the risk of CA funds. They key is diversification-don't put all your eggs in one basket.

Very good advice. I have done quite well with my fund choices by following this formula. I purchased no-load funds, with low management fees, and no back-end load charges.

I added additional criteria - to also look at funds that have had the same management for over 5 years, and have consistently outperformed their category.
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Old 03-21-2007, 02:27 PM
 
Location: Vero Beach, Fl
2,953 posts, read 12,552,101 times
Reputation: 2180
House-Hunter: "My wealthy clients have told me that thier money is in bonds right now as it is a transitionary time but will be moving the the SM in the short future."

You sound like a stock broker?

If you want to get educated on this, see the tutorials on such sites as Fidelity and Morningstar.
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Old 03-23-2007, 08:49 AM
 
Location: Tampa
3,981 posts, read 9,723,977 times
Reputation: 1182
hard to beat vanguard index funds...
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Old 03-23-2007, 09:00 AM
 
Location: Near Charlotte, NC
405 posts, read 1,172,219 times
Reputation: 197
I agree - my Vanguard REIT Index Fund Investor Shares (VGSIX) has a 23%+ return over 5 years (14%+ over 10), but the Vanguard FTSE Social Index Fund Investor Shares (6%+ over 10 years) could be a bit better.

That's what I get for choosing a 'socially conscience' fund
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Old 03-23-2007, 10:09 AM
 
Location: Vero Beach, Fl
2,953 posts, read 12,552,101 times
Reputation: 2180
You are both right - Vanguard is solid (low fees) - I did sell my GNMA fund. Take a look at Dodge and Cox - I have done very well with their funds.

I invested quite a bit in Oakmark Select some years ago and while recent perfrmance is not stellar, I have done very well with this one, too.
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Old 03-23-2007, 10:14 AM
 
Location: Near Charlotte, NC
405 posts, read 1,172,219 times
Reputation: 197
Both Dodge & Cox funds we have available in the company 401k are closed to new 'individual investors' - but I am heavily in both and am quite pleased.

You are starting to scare me - I also have OAKMARK EQUITY AND INCOME FUND - OAKBX (5 year - 10%+) and OAKMARK GLOBAL FUND - OAKGX (5 year 18%+)
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