With only $5,000 to invest, the number of individual stocks you could purchase would be very low because you generally need to buy in lots of 100 to get the best ask price. If you put $5,000 in one mutual fund, you suddenly have a stake in literally hundreds of companies' stocks/bonds/etc owned by that particular mutual fund. Mutual funds are generally the best alternative for the small investor or those who want to manage their own money but don't want to deal with the potential volatility of individual stocks/bonds/etc.

 

1. The difference in the price available to me on the market would be offset by expenses of the fund .

 

2. Many funds are managed by people who are sensitive to the performance of the fund in a short timeframe. They don't want to be judged as performing at a lower level than their competitors, therefore, they make short-term decisions in order to have their ROI be strong for a qtr/year.

 

Diversification IMO is overblown if you're a long-term investor. Do your homework and pick the right companies and history says you'll be fine.

I guess I'm putting into a 401K for the first time -- thanks to all those previous crummy companies that were too cheap to do such a thing for their employees -- and I'll confess I don't know jack bone about it. Completely lost. Personally, I'd rather they deposited the money into my horse racing account. But I guess I'm in.

 

The biggest mistake I see is people being way too conservative ("that's the way my dad always did it" mentality) and they cost themselves money. Make sure the great majority of it is in equities.

 

Note: I have no financial training so take what I say with a HUGE grain of salt. With that said, mine have done very well.

I have both, I use my broker but I also trade a fair amount myself. I enjoy my brokers advice, but I still like to purchase on line.

1. The difference in the price available to me on the market would be offset by expenses of the fund .

 

2. Many funds are managed by people who are sensitive to the performance of the fund in a short timeframe. They don't want to be judged as performing at a lower level than their competitors, therefore, they make short-term decisions in order to have their ROI be strong for a qtr/year.

Diversification IMO is overblown if you're a long-term investor. Do your homework and pick the right companies and history says you'll be fine.

 

#2 is simply not true. Period. Most funds are managed by advisors with long term outlooks because most mutual fund investors turn to 5 and 10 year performance indicators to determine which fund family to invest with. Mutual funds are long term investments and are not meant to be managed or redeemed on a short term basis.

 

Diversification is a very important concept for long-term investing especially for investors with limited knowledge in how to structure investment portfolios.

Do you have money either directly in stocks? Stock mutual funds?

 

If not, why?

Bills

1. The difference in the price available to me on the market would be offset by expenses of the fund .

 

2. Many funds are managed by people who are sensitive to the performance of the fund in a short timeframe. They don't want to be judged as performing at a lower level than their competitors, therefore, they make short-term decisions in order to have their ROI be strong for a qtr/year.

 

Diversification IMO is overblown if you're a long-term investor. Do your homework and pick the right companies and history says you'll be fine.

 

I disagree wholeheartedly about diversification. It is not overblown, it is more of a "safety net". History does say that if you pick the right companies you'll be fine, it also says that if that sector of the market crashes you'll be royally screwed. I do this every day and deal with similar questions every day. My response is always the same: How well do you want to sleep at night? :lol: Me personally, I can't do it.

 

I think you made the key distinction with your last sentence. You need to do your homework. The problem is that people want to diversify just for the sake of diversifying. So they pick a company in a sector they know nothing about and say "looks good to me". I think there is certainly something to be said for picking the right types of companies or right type of market sector. The same can be said for not putting all your eggs in one basket.

#2 is simply not true. Period. Most funds are managed by advisors with long term outlooks because most mutual fund investors turn to 5 and 10 year performance indicators to determine which fund family to invest with. Mutual funds are long term investments and are not meant to be managed or redeemed on a short term basis.

 

Diversification is a very important concept for long-term investing especially for investors with limited knowledge in how to structure investment portfolios.

 

:thumb::thumb: Beat me to it.

I would love to be involved in this, and have looked at it a little, but I need explanation as to how it works.

The biggest mistake I see is people being way too conservative ("that's the way my dad always did it" mentality) and they cost themselves money. Make sure the great majority of it is in equities.

 

Note: I have no financial training so take what I say with a HUGE grain of salt. With that said, mine have done very well.

 

Good disclaimer. I have dealt with customers like yourself in my line of work. A couple of things.

 

First, what you describe fits the bill to a T of what I see from this type of investment strategy. Investor X makes a lot of money aggresively pushing a certain sector or instrument of the market in the short run. What most don't hear about is what happens next. Over the span of a year or two Investor X's portfolio crumbles due to a sharp downturn in the particular sector/company, etc.

 

Second, my advice is that the type of investment strategy you describe is fine for someone in their 20's and mid 30's. Taking chances can be a very good and profitable strategy. But as you reach 35 you need to be working towards a more stable strategy that can still give you long term results. With any luck, you've made a bit of cash in your 20s and 30s and you don't NEED to take those unnecessary chances. If your putting in the amount of work I think you are then there is absolutely no reason why you can't find a more stable option with a great ROR.

 

Again, just my two cents.

I have a mutual fund. Have had it forever. Waiting for it to get back to even so I can cash it in. I think putting the $$ in a CD would be more profitable. Am I correct?

I have a mutual fund. Have had it forever. Waiting for it to get back to even so I can cash it in. I think putting the $$ in a CD would be more profitable. Am I correct?

 

The rules of my broker/dealer with whom I am affiliated preclude me from offering any specific investment advise in a forum like this. However, your comfort level (i.e. Can I sleep at night trying to get a 15% return in a mutual fund with the chance of losing money or am I more comfortable settling for a 4-5% guaranteed return of a CD) should be a consideration before you decide what to do. Never underestimate the importance of assessing risk tolerance when investing in anything.

Bills

 

Nothing wrong with a few T-bills in the ole portfolio.

Bought it at 448. Sold it about 12% higher .

 

I bought it at $475 and sold at $550, shouldve held on a little longer. :mad:

In. In several ways. A few individual stocks in a taxable account. several mutual funds inside IRA's, Roth IRA's (some that are managed by a broker and some that I manage completely using TDAmeritrade) and pumping as much as I can into my 403b and my wife's 401k. Also trying to get into real estate while the market is down. For those looking to get started, I suggest going to your library and reading a couple of books on investing, or checking out some reliable websites for info. Also, the best place to go is to talk to someone who has "been there and done that" and is successful in the ways that you would like to be successful.

 

l66

I disagree wholeheartedly about diversification. It is not overblown, it is more of a "safety net". History does say that if you pick the right companies you'll be fine, it also says that if that sector of the market crashes you'll be royally screwed. I do this every day and deal with similar questions every day. My response is always the same: How well do you want to sleep at night? :lol: Me personally, I can't do it.

 

I think you made the key distinction with your last sentence. You need to do your homework. The problem is that people want to diversify just for the sake of diversifying. So they pick a company in a sector they know nothing about and say "looks good to me". I think there is certainly something to be said for picking the right types of companies or right type of market sector. The same can be said for not putting all your eggs in one basket.

 

Your second paragraph is EXACTLY how most people diversify. Diversification for diversification sake costs people money.

 

We'll disagree on the first paragraph. While no one should be solely in one sector, you often will cost yourself money if you pass up a strong stock simply because of the sector.

 

We all have different risk tolerance. Mine is high and its worked well. IMO if its a good stock and undervalued, I'm on it regardless of the sector.