Does anyone know the best mutual fund to invest in, which has high yield and is safe?
- posted
16 years ago
Does anyone know the best mutual fund to invest in, which has high yield and is safe?
No; no one knows.
If you want "safe", stick with a money market account or bank CD or savings account.
Mutual funds generally are not "safe", and the best one to invest in depends on your goals, risk tolerance, how long it's going to be before you're going to need the money, whether this is for a regular investment account or IRA, whether you need current income or are investing for long-term growth, etc. Since you didn't tell us any of those things, it's impossible to make suggestions.
-Sandra the cynic
Sure...I'll tell you in 90 days. That is the problem. You cannot know the answer. You can, however, find fixed income funds that have reasonable returns and are reasonably safe. But if you want better than reasonable, then all bets are off.
-john-
Yeah, that one. Personally I only invest in MF's that has high yield and is safe.
Try this one:
Stop and think for a minute. Suppose there were a "best" mutual fund and then everybody found out about it. Because of the demand, its price would shoot up, and all the other mutual funds would go out of business. See? With some thought you can answer your own question!
A 60-40 balanced fund is pretty safe. I've had one for the past 15 years thats gone up about five times. It lags stock booms, but outperforms dips.
I believe it was Will Rogers who made a suggestion with regard to stock purchases that, paraphrased, would apply equally well to mutual funds.
--ron
Actully MF prices don't "shoot up" just because a lot of people buy into it.
So what about the 90 days? What happens in 90 days that you'll be able to give OP advice?
Maybe not a lot of people, but suppose everybody bought into it. If there were one clear winner, as the OP seemed to believe, would you not expect everyone to become aware of that fact and to choose it?
But you said the price of the MF shoots up when a lot of people buy into it. Prices of MF's don't act that way.
In 90 days, he'll be able to tell the OP where he should have put his money
90 days ago. Hindsight is usually 20/20.Elizabeth Richardson
Don, Peter is right, but not explaining to you why you are mistaken. A fund will trade at the value of its assets. I trust we are talking about open ended funds, not closed end, which can trade at a premium or discount to NAV. People flocking to a fund will ultimately impact the value of the shares it contains. For example, VFINX (Vanguard 500 index) has 3.35% of its assets in Exxon/Mobil. So of the $139 per fund share, there's about $4 in XOM, about .04 shares. A billion dollar move into VFINX results in $33.5M buying XOM, about 360,000 shares. Given the 31 million shares that traded today, that billion dollars would hardly move the stock. In fact, VFINX would just buy the shares, and the fund that people are bailing out of would sell their holdings and the net effect on Exxon's price would be minimal. Now, if it were VFINX everyone bought, eventually there would be an imbalance, as the S&P got overpriced compared to the next 500 or 1000 stocks and eventually, people would come to their senses. JOE
Yes, I see. You are right. In my fantasy I am imagining that some particular fund is clearly and unquestionably superior to all others over a long term and everybody finds out. If that were true, as you say, the shares would not increase in value unless the underlying stocks increased in value. But it seems that other funds would have a hard time staying in business, because everybody would buy the superior fund no matter what its share value.
I am curious about what accounts for one fund being superior to another. I presume it must have a manager who comes up with a selection of individual stocks that are profitable compared to those held by other funds. In a rising market that is easy, and in a falling market it is difficult. And the more people who buy the fund, the more difficult it gets to find suitable stocks with all the money. It would seem that a manager's choices are limited, especially in a falling market. So thinking along these lines, I am inclined to agree with the people who claim that differences in the performance of various funds has a large chance component.
Hi Rick, rick++ schrieb:
How did you mean 60-40 balanced fund?
60% stocks / 40 % bonds ?Bye John
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I am not very informed about stock trading, not to mention mutual fund investing. In Money, Businessweek and Fortune magazines, I always see a long list of the best mutual funds to invest in. But I don't want to go by their recommendations because my feeling is that they don't have the best interest of the average investors in mind. It appears that sometimes when the professionals and insider stock traders recommend to the public to buy a stock, that they themselves were at that time selling, and that is how they make their money. I am interested in finding the most profitable and safest stock investment opportunities through the word of mouth, by those who are presently investing. It seems I will also need to read a few good books on mutual fund investing to understand the market and the psychology. Any recommendations would be appreciated.
Thanks for your reply. You sound knowledgeable about this. I intend to invest for long term growth. I am also seeking for the best books to read about this. Any ideas?
I learned most of what I know about investing from the morningstar.com web site instead of from a book. They have some really good tutorial material (look for the "investing classroom" links) as well as articles and columns. Other people here have said that the "Investing for Dummies" book is very good, but I can't vouch for that myself. (I've found some of the other books in that series helpful, though -- e.g., the "Estate Planning for Dummies" one.)
One thing you'll find, BTW, is that an even more critical decision than choosing a fund (or funds, probably) is coming up with an appropriate asset allocation plan.
-Sandra
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