Your Questions About Investing In Mutual Funds

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Steven asks…

What Are Some Mutual Funds Worth Investing In For Dividends?

Justin answers:

There is no benefit in getting a dividend from a mutual fund since the net asset value (NAV) will decrease by the amount of the dividend and you will be taxed on the dividends whether you took the check or re-invested it for more shares. You need to define the ‘worth investing in’ as high dividend, high appreciation, dividend above a certain % of NAV, etc. As your ‘worth’ is different from everybody else ‘worth’.

John asks…

Anyone have an idea about investing in mutual funds?

i would like to know if they are a good investment. Also , how soon can i expect returns and the risks involved

Justin answers:

It is not easy to answer your questions through Yahoo! Answers. Valueresearch is a comprehensive site answering several questions related to Indian mutual funds and also carrying up-to-date information on various funds.

The first link provided below has several easy to understand articles while the next two links have some practical questions raised by various investors and answered by Valuresearch team.

One my earlier answers captures the important points about how to select a mutual fund. You can go through that.

Good luck.

Thomas asks…

length of investing for mutual funds?

it seems like on vanguard.com and fidelity.com, for all the mutual funds the performance significantly diminishes by the 10th year…

like past performance indicates on almost all of the funds from both sides a trend of 1 year: 14% 5: 13% 10: 7%

does this mean after 5 years i should cash in the money and put into another fund or somthing?

Justin answers:

They are just following the trend of the stock market look are a a different 10 year period!!!!

Joseph asks…

Which is better for monthly investing,mutual fund or rd a/c, for short term saving?

Actuallly i am planning to save 3000 rs for 1 year or less than 1 year, I will open rd account in idbi bank or sip in mutual fund.

Justin answers:

Hi Kamal,

RD will give you guaranteed returns in the range of 5-6.5 %, while mutual funds may give you higher returns but they are not guaranteed. Also if you exit from MF within 1 year, then they may charge you exit load.

It seems that you need that money after 1 year, so RD may be safe option for you.So take decision accordingly.

Regards,

Pranav

Richard asks…

Investing through mutual funds versus investing directly in stocks &bonds?

Justin answers:

There are some differences here between each investment strategy, and you must weigh the pros and cons of each.

1. Mutual funds have a manager that allocates funds among stocks and/or bonds, whereas investing directly in stocks means you are making the decisions yourself.

2. Diversification, or minimization of unnecessary risk should be your desire. True statistically significant diversification can be achieved with 30 individual stock picks. Mutual funds can easily achieve this because they have plenty of funds and can buy large enough positions. In order to achieve diversification on your own, it would require you to research and choose this many stocks.

3. Trading fees required when trading large positions, as mutual funds are more likely to do, versus small positions, as an individual trader is more likely to do, will be smaller for mutual funds than for yourself. Those fees are spread out among investors in the fund, but you must bear those transaction fees yourself.

4. Most people don’t know, but 75% of money managers fail to “beat the market” every year. What does this mean? It means that if you invested in the stock market index (which represents all the stocks on the market), you would do better than 75% of money managers out there. Plus, they’re charging you a fee to select these underperforming stocks and bonds.

5. If you trade often enough for the IRS to consider your trading a business, you have all the issues of filing taxes, wash sale rules, etc. That you don’t have when investing in a mutual fund. The mutual fund shields you from all that, so all you have to look at is your profit line.

So, the call is really up to you. It’s a personal preference. Some people don’t have the time to research stocks and feel safer with a professional. Others like to feel in control and pick their own. Consider what above is important to you, decide what your tolerance level is, and either find appropriate mutual funds or appropriate individual securities to invest in.

Mark asks…

Why did Cindy Mccain today sell $2 million shares in mutual funds investing in SUDAN!!? Darfur?

Isn’t Drafur in Sudan????? So the Mccain family invested there? And just today…decided to sell the stocks?

How do you people feel about that?

source: FOX NEWS (I wonder if they really like Mccain)
Darfur…awful genocide and horrible things
http://en.wikipedia.org/wiki/Darfur_conflict
M G, FOX NEWS reported the story! They say through Mutual Funds.

Justin answers:

I do not vote because of the wife or husband.

Chris asks…

Teens investing in mutual funds?

I am 14 years old and very interested in the stock market, and investing money. I want to buy a mutual funds. Does anyone have any advice for me, or know of any banks/companies where I could buy mutual funds? Thanks!

Justin answers:

If you have some savings that you will not need to touch for a long time. I definitely recommend that you start investing. Learning these skills at an early age will definitely give you a head start in life.

Www.fidelity.com is a great place to start to learn about investing. It is a great source for mutual funds. Also yahoo Finance has lots of articles that are very informative and educational.

Take your time you are in no hurry and do your homework.

David asks…

How do you find out which mutual funds invest in a certain stock?

Say for example if I want to find out which funds invest with specific stocks such as Coca-Cola or Wal-Mart, how do I go about finding that out?

Justin answers:

Yahoo finance lists that information, but only to a certain extent. If you have access to a Bloomberg terminal (or you can get a friend or a stockbroker to check for you) you can find the information there.

Some financial libraries such as at business schools have Bloomberg terminals, but at $1,500 a month a lot of libraries can’t afford them.

It doesn’t matter where you get the information, it will be old. Mutual funds reveal that information quarterly and by the time the SEC gets their reports, the funds may have sold the stocks.

I hope this helps.
Gary

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