Mutual Fund Rehash

[blackjack50]

So I am "teaching" an economics class right now and my kids have to watch some Dave Ramsey videos. He has been talking a lot about mutual funds. Can someone walk me through what this is? Maybe give me some idea on where/when someone should get involved in them? I am almost 24 and I am hoping to go to law school so I don't have much money to spare (maybe a couple hundred bucks here or there...but not regularly).

PS:

If any mod sees this...maybe DP might consider adding a money section to the Self Help/Advice thread?

PSS

This is a duplicate put into a better section.

 

[Khayembii Communique]

A mutual fund is a pooled investment portfolio, whereby you pay into the fund and the fund managers manage the fund on the behalf of the investors. The fund managers typically take a percentage as fees and handle all portfolio management duties.

A very large advocate of mutual funds is John Bogle, the founder of Vanguard, one of the largest Mutual Fund shops in the world. His research advocates investment into low-expense mutual funds as a means of accumulating wealth over time (typically retirement savings). His strategy in a nutshell is to minimize expenses and taxes to realize the compounded gains on that money as opposed to giving it away over time. Thus I believe he advocates mostly no-load funds such as ETFs, which are mutual funds that only track various indices, thereby incurring extremely low management costs as fund management only involves rebalancing/reconstituting the portfolio to track the index and doesn't involve any extensive research or strategic allocation.

Mutual funds are a good choice for people who do not want to be actively involved in management of their own investment portfolios, though like everything I wouldn't recommend investing solely in mutual funds. It is always good to have a diversified portfolio to hedge against loss.

(Blah blah blah this isn't investment advice blah blah blah)

 

[rhinefire]

Funds cover everything, at 24 you need to start desciplining yourself by putting a certain percentage of your earnings whether large or small for your retirements. Read Jim Cramer' books and a book called "Wealth Without Risk. Do not ever invest in one thing if you do not undertand it and don't listen to your friends. Buy Kiplinger and Smart Money magazine monthly. Put time away and sign up for class on investing at night perhaps if you work days. Do not think you can time the market meaning getting in before it goes up and getting out before it goes down. SET YOUR GOALS and try hard to stick to them. DIVERSIFY! Put your money in different sectors for example some in a real estate fund, a little in a gold precious metals fund, a bond fund, small cap, mid cap and large cap growth. Be prepared to experience lows with the highs. If you plan to attend law school hopefullyyou will pick up some pointers from bright people but remember be careful on what adviceyou hear because it will always be YOUR money not theirs when it disappears.

 

[greyhat]

A mutual fund is a common term applied to Registered Investment Companies; they provide investors with portfolio construction and management.

Contrary to popular belief, investors do not own the assets of the fund but rather own shares of the fund which owns the assets on behalf of its shareholders (the investors.)

There are various types of structures: open-ended; close-ended and unit investment trusts, with open-ended being the most common type found in the marketplace.

There are also many different types with differences being asset class, style, sector, active vs passive, for example.