Ask MetaFilter questions tagged with mutualfunds

How risky are bond mutual funds?

david1230 — Sun, 10 May 2009 03:03:21 -0800

How risky are bond mutual funds? Help me understand the risk of bond mutual funds. Is a fund like VBMFX a good place to put some money for 1-2 years? How likely is this sort of fund to lose money during those two years? What general economic conditions affect the performance of bond funds?

green roth IRAs du jour

Anonymous — Mon, 13 Apr 2009 20:52:30 -0800

What are some environmentally and socially concious mutual funds that I should be switching my $2k roth IRA to? Since Washington Mutual is switching to Chase, if I figure this out before 4/20, I don't have to pay the $75 transfer fee, so now's the time!

Invest for the future vs. Debt reduction

Anonymous — Mon, 29 Sep 2008 18:32:35 -0800

Investing 201: Given the economic news of late, If the value of my mutual funds drop and the interest rate of my debts go up would it be prudent to liquidate the mutual funds to pay off my debts or should I "stay the course" despite this? Financial details inside... OK so I have about $15000 in Mutual Funds (Canadian RRSPs to be exact - these are like 401Ks, I think, where the money invested is for retirement and is not taxed until withdrawn).

I also have about $30,000 in debt that I am paying off.
Half of it is a line of credit at 9%; the other half is credit card debt at about 12%.

Until now, my strategy was to leave my investment money where it is, and allow it to grow despite the temptation to use it to pay off the debt.

Now, if the economy goes to hell, I am assuming that the credit card companies and banks will jack up the interest rates (is this a safe assumption?) and that the value of my investments will plummet (which is expected).

I'm not so concerned about the investments - I normally would have "stayed the course" considering that I am a far way off from retirement, however but I am concerned about the debt - if the interest rates rise, it might become difficult to pay these off in a timely fashion.

So here are my options:
1) Stay the course, watch the value of my funds drop (temporarily at least) and risk paying more interest on my debts and extend this already long and painful course of financial redemption (at the risk of my happiness, health and marriage).

2) Liquidate the mutual funds, pay the up-front tax, pay the income tax on the money I am cashing out, and reduce my debt by 1/3, for the sole purpose of having a smaller debt in the event that interest rates go up.

Given this assumption, do you think it would be a better idea to liquidate the mutual fund, pay the up-front taxes, pay the income tax.

I'm still thinking Door #1 (stay the course). But I am curious to know what the hive mind thinks!

Do socially responsible investments earn less?

espertus — Sat, 07 Jun 2008 14:53:38 -0800

Do socially-responsible mutual funds perform better or worse than similar non-screened funds? I haven't been able to find a recent objective report on the relative performance of socially-responsible mutual funds compared to mutual funds in similar sectors without social screens. Could anyone point me to such a report?

I understand that the term "socially responsible" is loaded. For my purposes, I'm just interested in the relative performance of funds that use this term, not whether they are really socially responsible.

Have Dime, Will Invest!

goalyeehah — Thu, 20 Mar 2008 20:21:57 -0800

Looking for Mutual Funds/Investments with low initial investment fees. I will soon be in a position to begin investing in mutual funds and IRA's. I feel like a little kid and would like to start next week. Some funds I have looked at are asking for an initial $3,000.00 investment. Are there mutual funds or IRA that ask for lower initial deposits, say in the $200 - $300 range......and are they solid companies?

Is now the right or wrong time to invest in diversified mutual funds?

lapsang — Mon, 19 Nov 2007 12:41:18 -0800

Is now the right or wrong time to invest 50k in diversified mutual funds? The basic plan of action is 60% U.S. large cap, 20% U.S. small cap, 20% foreign decided by filtering funds on morningstar and buying through vanguard, avoiding front loading funds.

The other pertinent facts are that I am investing on behalf of my father-in-law (colombian) for his grand-daughter (Colombian/Irish born in USA, my daughter) and I'm Irish. Not sure if this makes any difference other than the fact that I can probably take advantage of tax savings investments in either Europe and/or the US (and Colombia but I don't think so).

Thanks

Should I put my Eggs in a Risky Basket?

ikahime — Tue, 17 Jul 2007 20:34:07 -0800

IRAfilter: Am about to get a traditional IRA to roll some retirement funds into from an expired employer plan. Got stuck when I was asked which mutual funds to select. I've probably got around $4K coming from an old emloyer in another state. I must roll it into a traditional IRA or take heavy tax penalties. I've decided on Vanguard, but know nothing about which mutual funds I should select. I guess I'm young enough to afford to be a little risky, but I'm taking any and all advice. Mid-caps? International Value Index? I'm so overwhelmed with choices, and I don't have a lot of time to whittle through them all.

Selling shares within a Roth IRA

electric_counterpoint — Fri, 13 Jul 2007 10:16:10 -0800

What are the rules about selling shares held in a Roth IRA? Warning: still a bit of a finance n00b... Maybe I am just Not Clear on The Concept, but it seems to me that, when the market's had a good few years and the stocks and funds I hold are up, I should sell them and lock in the gains. Since they're good companies (or good funds, as the case may be), I'd probably repurchase them with the proceeds. At least, this is what I would do if I owned these shares in a traditional brokerage account, but I own them within a Roth IRA. However, I can't find anything online about anyone doing having done this, let alone any advice about it!

I know that I can't sell my shares and divest from the IRA completely without paying an early withdrawal penalty. I also know about capital gains taxes and the wash sale rule and all that, and I know that those apply to taxable accounts. Are the same rules in place for Roth IRAs? Am I just missing the point of an IRA, or what?

Your fund did not outperform its benchmark...

spicynuts — Fri, 12 Jan 2007 07:34:26 -0800

Fund benchmarks vs. the fund itself. How do I invest in my fund's benchmark rather than the fund itself? Everyone's heard that mutual funds rarely outperform their benchmarks in the long term. I think I've reached the end of my patience with seeing "Your fund had a good year but did not outperform its benchmark for the third straight year" on every prospectus I get. I'd like to dump a bunch of funds and shift the money to the benchmark (Russell 2000, etc) but I'm having difficulty figuring out how to do that. Do things like the Russel 2000 Small Cap have ticker symbols? If so, are they considered mutual funds or index funds or straight up stocks? To invest in them is it a simple matter of finding the ticker symbol and purchasing? Are there any potential negatives to doing this if your investment horizon is 20+ years?

Beginning investor, seeking basic opinions and links for more research & self-teaching!

Anonymous — Fri, 27 Oct 2006 10:20:06 -0800

Total beginner to investing and finance, researching how to start investing maybe $2K each year, mostly in socially responsible mutual funds -- and how a young, healthy person should balance retirement investment with other kinds of investments. (I'm coming from a low-income background, so I haven't watched people invest or had people talk to me about it -- I'm very open to criticism if you see me missing important points.)

Quick background: U.S. citizen, female, almost 30, no medical issues at all (yet) and hoping to live 50+ more years. No existing investments now, and hopefully never a 401K (editorial/creative freelancer and totally in love with my work -- so I'm saving for "old age / medical care" rather than "sudden end of salary"). I have a simple standard of living (for an American) and want to live simply my whole life. I don't want kids. I have an emergency-fund in an account that earns close to 5% interest but is totally liquid. Other than that I have no savings or assets to speak of, but I'm debt-free. I'm hoping to spare maybe 2K/year, from now on, to invest.

So far, my research suggests I should have a Roth IRA. I want most of my Roth contributions to go in a socially responsible mutual fund (let's accept for this thread that I've done enough research to decide that "responsible" is more important to me than "highest interest regardless of sources"... if you're interested in debates on responsible investing, see here and here; chart of responsible funds and their relative performance here). So I'll need an account in a brokerage where I can do everything by myself online (possibly Scottrade or Ameritrade -- opinions?).

Once I have this account, can I also just buy individual stocks from any companies I like? Will it be clear in my account how to designate each new contribution as either part of my Roth IRA or part of a shorter-term investment? And actually, is it important to balance my Roth contributions with other shorter-term investments, or should all my $$ go into my Roth (since I could withdraw my original contributions from it in an emergency)? For stocks, are there databases where you can search stocks by, say, a combo such as industry type + price for one share + different performance indexes? Maybe even with flags (either self-applied or third-party) for "green"/"responsible"/etc.?

Thanks for any and all answers and/or suggestions re. where I should go to teach myself more!

6 Months to Invest... Starting NOW

LGCNo6 — Wed, 25 Oct 2006 23:27:15 -0800

The clock starts today. I just sold a house yesterday and ended up with a decent chunk of change. On next year's tax form, I'm going to have to pay taxes on the gains, but I have 6 months to make the tax money work for me... So if you had ~$28K (the amount of tax I'll owe) to invest for 6 months, what would you do with it? Ideally, I'd like to max out the return on it, so I'm willing to be pretty aggressive with it.

I know what I'll do with some of the other funds from the sale, but I'd like to hear what other people would do in the same situation.

Analyzing mutual fund performance

contessa — Mon, 25 Sep 2006 12:16:33 -0800

How do I best analyze the performance of my mutual funds? I've got 3 sets of mutual funds, all for the purpose of retirement investing.

The first is a defined contribution plan that only my employer can deposit into. It is a well-run state retirement system. I get to choose how the funds are invested. I am in 5 funds, and in the next year (2007) contributions will be ~$420 per quarter ($5k/yr). I like this because, hey, free money.

Next is a deferred compensation plan (457[b]) which only I contribute to - there is no matching. Same sort of deal as above, only with a different mix of 5 funds. I contribute ~$215/paycheck biweekly (~$5600/yr). I like this because it is easy -- I don't really notice the deduction and also it's pre-tax.

Last is a Roth IRA which I hope to max out each year. For 2007 that means $4k. I don't contribute on a set schedule, just sort of whenever I have the $$ and the time is right. I am invested in 2 funds here. I like this because yay, no taxes later (sorta).

With all this lead-in: Given that I don't plan to ditch any of these anytime soon (& I hope to keep investing at this level or higher for the forseeable future), how do I make sense of all this? Do the standard financial ratios apply? Is there a customary way for the individual investor to chart this stuff? What do you do that works for you?

It was all going so well...

forallmankind — Sun, 13 Aug 2006 16:22:03 -0800

I'm confused - I want to plan for my retirement and have got as far as applications for a 401k and a Roth IRA; but then it all goes hideously wrong.... I am reasonably financially illiterate so I'd been reading jdroth's Get Rich Slowly and Ramit Sethi's I Will Teach You To Be Rich and ran off to open a 401k and a Roth IRA.

Stage 3 of the 401k application process is Choose Investments, at which point I have pick from 16 choices: all 16 mean absolutely nothing to me.

When I apply for a Vanguard Roth IRA and hit Learn More About Vanguard Mutual Funds, I'm told that I can "Choose from among more than 100 low-cost pure no-load Vanguard® mutual funds". I rather suspect that these 100+ mutual funds will also mean absolutely nothing to me (although I do understand the value of no-load).

So how do I learn about these things and make educated decisions? It's clear that I have absolutely no idea what's going on, but I want to get these things started now and I don't really have the time to take a degree in investment banking - how do you guys do it?

Investing beyond an IRA

letitrain — Thu, 29 Jun 2006 17:13:07 -0800

How can I invest more than $4000 per year toward my retirement without annually paying taxes on the gains? I've got a traditional IRA with Vanguard, and it's set up with an automatic investment plan that maximizes my IRA contribution ($4000/year for me). I currently save about twice as much as that in a short-term savings account, and I now have a comfortable emergency fund built up. I'd like to stop putting the extra money into the savings account and instead put it toward retirement.

I know I can just buy mutual funds, but I'd rather buy them in a retirement arrangement so all my gains aren't lost to taxes.

Some details:
• I have no retirement plan through my company.
• I do freelance design, so I might be able to open an account aimed toward small business owners. I currently do not have a business license, but I'm trying to get that in order as the business grows.
• Renter, one mortgage on raw land that I intend to build on in 5-10 years, 30 years old, married, wife has CA state pension plan, no kids (in case any of that matters).

Thanks!

Calculating mutual fund profits with pre-authorized contributions?

greatgefilte — Fri, 23 Jun 2006 21:03:30 -0800

Is there an easy way to figure how much profit one has made from a mutual fund portfolio where additional fixed contributions are made each month? I started an RRSP mutual fund account with my bank last year, and designated a certain amount of money to be taken out of my chequing account each month and used to buy more units of the funds. Although I can easily find out how much my current holdings are worth, is there some way to figure out how much profit the mutual funds have earned at any given point? It seems like it would take forever to do manually!

How does one pick stocks?

godawful — Tue, 25 Apr 2006 16:40:01 -0800

I'm seeking advice on and a short term investment strategy that won't offend Grandad. My Grandad has offered me some money to invest over a 12 month period. I can keep what I make in excess of interest. He's made it implicit that this venture carries no financial risks for me (I trust him fully). It's clear he mainly wants this to be a teaching and bonding experience for us.

So far, so good: this is a generous offer, I'm keen to have this experience with him, and the last thing I want to do is appear ungrateful. However, he has in mind that I should pick a few stocks and sink the money into them exclusively.

I plan on going along with him on this in spite of what I think I know of the market. I'm pretty sure I understand random walk theory, that short-term stock picking generally comes down to luck, but I know he believes and behaves otherwise. He's a restless investor, always going into this and out of that.

I don't plan on arguing with him over this after he's been so generous, so a sensible mix of funds/indices/bonds is out. With this limitation in place, how can I best promote my own gains and protect him from any loss?

How does a complete beginner pick a stock? He seemed to imply that he'd just give me the money and I should set up an account with a broker or something. Is that a sensible way to go about it?

I would be in the US, while he's in Belgium. Any implications from being in different markets?

ETF Returns

spicynuts — Wed, 23 Nov 2005 07:52:14 -0800

When researching Indexed ETFs or Closed-End ETFs with the intention of buying, should I be looking at the fund's Yearly NAV Return or the Market Value Return as an indicator of success? Which number will tell me how much the fund has earned over the various periods displayed in the fund's charts? Which should I be paying more attention to, and if the answer is 'It depends on your goals' then what are the differing goals that each return number is germaine to? Also, any additional info on ETFs in general is appreciated.

Unloading a loaded mutual fund

acoutu — Tue, 25 Oct 2005 12:03:16 -0800

FinancialFilter: Should I sell my DSC mutual funds now or later? I have some mutual funds that have deferred sales charges. About half of them will be free of the 3% DSC at the end of 2006. The remainder expire in 2007 (those carry 4.5% blended rate DSC right now).

I've held these funds since 2000. They haven't gained at all since then, since some sustained enormous drops in the post-9/11, post-Nortel world, offsetting everything else. A CFA I know recently suggested I sell my funds and put them into ETF. I had been planning to put my funds into ETF when all the DSC expire. However, this guy (who has only a casual acquaintance and nothing to sell me) said that, if I sell and lose the DSC, I'll make it back on the ETF returns, since they have no MER (management expenses).

I know it was stupid to buy funds with DSC. But the financial planner who originally sold these funds was a close friend who convinced me these funds would provide higher returns than the no-load funds at my bank. He also provided incorrect information about when the DSCs would expire. I recognize all this as a mistake now, and so please don't feel a need to lecture me on my stupidity.

What I really need is to know whether I should sell now or wait till some or all of the DSC expires. It's not a small sum of money, so I'm not dickering over $25.

What Is the Most Financially Profitable Way of Investing $5,000?

geoff. — Wed, 03 Mar 2004 18:19:04 -0800

What is the best thing to do with a small amount of money, around $5,000? Savings interest is almost a joke, CDs look attractive or maybe even mutual funds. Preferably the safer the better, as in investing it all in a high-risk mutual fund and losing it would make me cry. I've checked out "Investment FAQ" and it seems as if CDs are the best. I know little about investing but making money doing nothing intrigues me. What would be an expected return on such an investment? Is it even worth locking the money up for something like $10 a month? This is just out of curiosity really. If I was really serious about this I'd be talking to a paid professional. I was just seeing if $5,000 was really enough to invest in or was it more of a "ha ha ha, investing is only for RICH people". All advice given will be seen as for educational purposes only.