In
closing, financial planning and investing are subjects that you could write a
1000 page book on. I will probably write more about this subject as time
permits.
Just
remember, investing in mutual funds is like hiking to a waterfall because
there's risks involved. Mutual funds are not guaranteed by the federal
government and are subject to the consumer demand for securities. The past
performance of mutual funds doesn't guarantee future results. Stock market price
fluctuations are involved and you may gain or lose money.
Life is
full of risks because there's no guarantee:
1.
That if you start
your own business that it will succeed.
2.
If you're
employed by a large corporation that they will never lay you off or pay you
enough to retire on.
3.
If you put your
savings in a bank certificate of deposit, which pays 5% interest that it will
keep up with inflation.
I invest
in mutual funds because I'm comfortable with:
-
Professional management and their total return past performance records.
Having 100 stocks in a portfolio selected by professionals is safer than
investing in a few individual companies by an amateur investor.
- The
high consumer demand for using mutual funds as a long term wealth creation
vehicle for retirement, especially in 401K accounts. Plus the increasing
number of professional women in the workforce who have started to invest
over the past 30 years.
- The
massive amount of money that's invested in mutual funds. Check out the
number of mutual funds that have at least 10 billion dollars in total assets
from Fidelity, Vanguard and the American Funds group in Yahoo Finance:
http://finance.yahoo.com/funds under Tools – Funds by Family. See what
the net assets are in the profile for
AGTHX.
- The
hope that other new investors will look at past mutual fund performance
records like me and take a chance those decent returns will continue into
the future.
-
Competition between different fund families. If a fund’s total return
performance is below its peer style category group, then you can redeem your
shares and invest in a better performing fund. Thus, fund managers have to
produce because you can cash in your shares for the next end of day Net
Asset Value. Remember, some funds do have redemption fees if you cash in
your money in less than a year, so read the prospectus. In addition, since
you’re doing your own research, invest in NO-LOAD funds, so you don’t
pay a sales charge on top of the management fees.
Even
though I've invested in mutual funds since late 1992 and enjoy this subject,
none of the sources I've used on my website endorse my financial strategies.
It's still up to each individual to educate themselves about the risks and
rewards of investing. Remember, it's your hard earned money, so please invest
carefully. Good luck!
Sources
and mutual fund information links:
(1)
The Almanac Investor by Jeffery A. Hirsch and J. Taylor Brown
Other mutual fund return information is from Yahoo Finance
and Morningstar.
(2)
This doesn't include dividends and capital gains you might get taxed on.
http://finance.yahoo.com/funds
http://www.morningstar.com
http://www.kiplinger.com
http://mutualfunds.about.com/
http://www.marketwatch.com/pf/fund/
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