What do you know about Mutual Funds?

Question

I just turned 18, and want to invest in a mutual fund.

We learned about them in school, and my teacher said that if we find a good one to invest in, and we put in atleast 50 dollars every month for 40 years, we can retire with millions of dollars.

It sounds too good to be true

Can anyone tell me a little more about mutual funds?

Where would be a good place to go to invest?

Answer 1

It's not too good to be true.  Time value of money is powerful.  In fact, Einstein called "compounding"  the "ninth wonder of the world."

Mutual funds are just a collection of stocks and bonds.  They are perfect for beginners because they are professionally managed so you don't have to worry about what stocks or bonds to buy.  Plus, they are diversified, thereby spreading out your risk.  To learn more about mutual funds, you can read this Investopedia article: http://www.investopedia.com/university/m...  Investopedia ( http://www.investopedia.com/ ) is an excellent site to learn, not just about mutual funds, but about investing in general.

There are many different places you can invest.  I prefer online discount brokers because they are cheap and convenient since you can do everything online.  I currently use Firstrade ( http://www.firstrade.com/ ).  They are cheaper than the big name brokers such as Etrade, Scottrade, Ameritrade, and Schwab.  Their easy to use website makes them excellent for beginners.  I would definitely recommend you to check them out.  

Answer 2

the bad thing about the time value of money is by the time you have the money, you don't have the time.

Answer 3

There are many people just like you that are, or were looking to invest and those that did bought Mutual Funds and/or Exchange Traded Funds (ETFs).  One purpose of mutual funds is to help investors like you, who are either just entering the investment world or who have no investing experience.  Once you feel you at least have an understanding of investments you should look into ETFs which are similar to mutual funds but are traded on the exchanges.

Mutual Fund companies as well as ETFs have an entire array of products many will fit your needs. You can go to the MSN.Money website

http://moneycentral.msn.com/home.asp  it has an entire section on mutual funds and Exchange Traded Funds.  Read about the various products and in doing so you will be getting investment ideas and at the same time educating yourself about investing.

You could also contact the funds companies for more information.  I have found that Vanguard & Fidelity can meet your needs for mutual funds.  The service and information they provide is all free and you will find it helpful.

Regardless of what you decide, do not ever let anyone tell you not to invest, especially those that do not invest themselves.

Answer 4

ING,

person I know works for them .. .to learn more you should contact em or something they're a good company.

Answer 5

Devon,

Your teacher is correct ... as long as everything works out perfectly.  Risks?

1.  Investing should be viewed as a risk.  The market is risky ... you put down your money and you may lose a part of it ... OR you could retire as a millionaire.

2.  The chancy part of finding a "good" fund.  I'd advise not to select just one fund, but at least three.

Mutual funds are typically designed to offer investment opportunities in different economic sectors ... like a health fund, or basic materials fund, growth funds, etc.

My advice is to trot your fingers to Morningstar.com.  Morningstar is the premier fund rater ... they offer no funds ... just excellent advice on mutual funds, ETFs, and stocks.  They even have an educational center where you can learn the terms and all that.

I do wish you the best of luck!

Uppity Wench

Answer 6

You teacher has done a wonderful thing for you.  He/she is right on the mark.  There are tens of thousand of mutual funds to choose from.  It really doesnt matter too much which one you pick.  The trick is to do what your teacher has said and never stop and never change from one fund to another.  This is not very easy to do but if you listen to your teacher and me you will become wealthy.  Most people do not do what your teacher has said and that is why most people are not rich.  BUY AND HOLD A GOOD MUTUAL

FUND FOREVER.