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Old 01-30-2018, 10:44 AM   #1 (permalink)
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Mutual Funds

Anyone care to give me a crash course in mutual funds. I'm looking for an investment I can put some cash and leave it with less risk than direct investing. I've looked up some information but the way to get started still seams dated ie (going to a bank or broker and setting it up)
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Old 01-30-2018, 10:57 AM   #2 (permalink)
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I use E-trade, you can use any brokerage account.

Interesting read:
https://en.wikipedia.org/wiki/John_C._Bogle

There is a podcast that I think makes a lot of sense called "money for the rest of us".

I don't have any specific funds to suggest to you.

I think the best investing advice is "don't invest in anything you don't understand" so you might have to do your research.

good luck.
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Old 01-30-2018, 11:02 AM   #3 (permalink)
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Make sure you keep an eye on the fees. I vaguely remember an email from my retirement fund company warning that fees on Mutual Funds were going up.
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Old 01-30-2018, 12:35 PM   #4 (permalink)
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For money that you want to shovel into a fund each month or each year and not think about until retirement, an asset management firm is a good way to go. Find several and compare rates and their returns since before 2000. Then compare those returns year by year to how the markets performed.

Ask if they are a fiduciary, meaning that they have your best interest in mind when investing. Sounds obvious, but many companies can't answer yes to that question.

If you want to take a more hands-on approach, e-trade is really easy to set up. I think the other online trading companies are probably just as easy. Some set up their trading fees to encourage trading more often in smaller increments and some encourage fewer, larger trades.
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Old 01-30-2018, 05:36 PM   #5 (permalink)
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You need to identify your goals, first. Is this retirement funding? College savings? Rainy day fund? This defines your timeline, and the type of account you want (regular brokerage or any of several tax advantaged accounts).

Next is your risk tolerance- what happens if the market dives (eventually it will)? Do you try to sell off, or do you take the opportunity to buy more for cheap?

I like playing with stocks, but for serious investing, I'm a true believer in Vanguard style index funds. Basically, your fund manager sets an automated strategy that tries to track as closely as possible an index, such as the S&P500. The advantage is that you automatically land at about 80% among comparable active funds, and consistently. Active funds, on the other hand, try to pick and choose investments, time the market, and run plenty of risk of losing money, compared to an index--and then you have to pay higher fees to support active managers. Another advantage, if you're in a taxable account, is fewer taxable events. Since index funds tend to trade less often, you end up with fewer realized gains, and can put off the tax until you decide to sell your shares.

Your timeline and risk tolerance also help you choose asset classes--stocks vs bonds, capitalization size (small companies are riskier), and domestic/international.

Then, you're best of if you can set & forget. Make the investment automatic, and check in every six months or so to reevaluate your strategy. Whatever you do, don't make emotional decisions. If you've set your risk and timeline correctly, you can think of downturns as opportunities to buy cheap band make bank when the markets recover.

That's Axel Crash Course on investing. I'm self-educated and fully uncertified. Oh, and I have zero fiduciary responsibility to anyone reading this. You nut.
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Old 01-30-2018, 06:00 PM   #6 (permalink)
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Another note on Axel's point - I am not super familiar with index funds, but most of them have extremely low fees, so it's a nice option to get into something that will grow (assuming the market is) relatively affordably.

If you go with an asset management program (Merril Edge, for example), you will pay something to those people for the tools that they offer, but they make it really easy to break down the fees structures of the funds you are investing in, and they have a wide range of load waived or NTF funds to choose from. I have found that a platform like that makes it much easier for new investors to navigate the information overload that is out there, and you can do everything online.
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Old 01-30-2018, 06:59 PM   #7 (permalink)
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Much like everyone else sounding off here - I'm not licensed, trained, or employed in the investing arts.
But, with the market at all time highs right now you might want to stay liquid until it crashes and snatch up stocks for pennies on the dollar when it does. Any gains you might make between now and then will be erased with the next market correction. If history is any indication, it shouldn't be too long.
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Old 01-30-2018, 08:08 PM   #8 (permalink)
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We might have already started over the cliff these past two days, or we might have another five years of bull market that you'd regret missing out. Or we might wake up to nuclear war tomorrow morning.

Anyway, practically speaking, I do business with Vanguard and am perfectly happy. You have access to some of the lowest cost mutual funds, and their actively managed funds are comparatively low cost, too.
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Old 01-30-2018, 08:37 PM   #9 (permalink)
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Yea, I’m just trying to understand how it all works. My 401k is invested with vanguard and it’s done very well for me. My play money is just that but I was looking at setting a supplementary rainy day/house fund.
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Old 01-30-2018, 11:35 PM   #10 (permalink)
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I know quite a few people who use betterment as their rainy day fund for money as they don’t need the money right now and do not plan on using for a while.

If this is money you definitely plan on using in the next 12 to 15 months then you are better off finding a high interest bank account to put the money in. Ally Bank on line has a very high interest rate currently
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