My investment plan is to buy and hold mutual funds. Do I need to buy into mutual funds when they are "low"?

Question

Do I need to apply a similar attitude of buy low like I do with individual stocks? Or is it a moot point since I plan on only investing into funds that have a long track record (10-15 years) of good averaged returns (So I wouldn't be able to "buy low" into those funds since they've been successful for a long period of time)?

This is really a question for those familiar with investing in the US Stock market(s).

Answer 1

any time is right time for investing in mutual funds. it doesnot matter whether you have invested when they were low or when they were high. looking at the past, in the history  there has been a little difference of 1 or 2 % in the asset value of those who invested when the stocks were high and those who invested when the stocks were high. mutual funds are actually chosen for long term investment. its always better to choose the funds with good longterm records as there will be a little risk with them. investing in the new funds needs good experience and knowledge and have a bit high risk factor. so please choose the funds which have good performance records and if you want to invest in new funds then  invest carefully.

Answer 2

just like any type of asset, you always want to buy when fund prices are "low", no matter what type of stock or stock mutual fund you invest in and no matter how long you plan to hold on to the mutual fund. PRICE MATTERS. If you start investing in mutual funds thinking prices do not matter since you're going to hold onto the mutual funds for a long time, you're going to get in trouble. As an example, look at what a typical s & p 500 index fund was at 10 years ago and where it is now. Hasn't really gone anywhere has it?

Answer 3

You can still be able to "buy low" into one of those long term "successful" funds.  In this type of investing climate, good funds can and do go down just like bad funds can.  For example, Dodge & Cox Stock Stock fund has been recommended for years in many investment magazines.  It has a very successful long term record and a few years ago was selling at a price of $166.60.  Yesterdays price was $112.90.

No one can predict the future with any accuracy.  Studies have shown trying to "time" an investment usually does not work.  People who buy at the high, and hold for many years do better than people who time it and try to buy low, sell high and miss several of the best days.

Since you are ready to invest now, and now is one of the low times, I would go for it.  If you are afraid your investment will go lower, then dollar cost average into it.

Answer 4

this is right time to invest...most of the funds are showing their one year return in negative...so for 2 or 3 tears this investment fetch you good return

Answer 5

Even funds with an excellent long term track record have periods when they are much less expensive than normally.  That is the time that you want to stock up.  

Here are 3 examples of funds that Morningstar considers outstanding but have had periods of outstanding buying points

CMG Focus has a 10 year average annual return of 25% but its 2002 return was -17.8% and its ytd return is -10.5%.  

Matthews China Fund has a 10 year average annual return of 21.5% but its 2002 return was -7.5% and it ytd return is -24.3%

Vanguard Capital Opportunity Fund has a 10 year average annual return of 15.1% but its 2002 return was -28% and it ytd return is -6%

Certainly with these 3 funds now is a much better time to buy than say during October of last year.  Perhaps next March might be even a better time to buy.