Mutual Funds Advice Needed

[floridamcmarion1]

I got to thinking that it will make better sense to change my wife's tax withholding to get less of a refund and instead invest that money into mutual funds. I'm looking at a monthly contribution of probably $250. I need advice based on your experiences of the best company to go with. Very low fees or free is a good thing. I also want no or a very small initial investment requirement. I will need an ease of cashing out in case I need the money for an emergency. Any advice would be greatly appreciated.

[CTDon]

The best suggestion i can give is to see what Consumer Reports has to say. Your library will probably have all the back issues, but of course you'll have to dig for the right one!

You also might want to check www.clarkehoward.com. Clark Howard is a consumer advocate who has a radio show. I believe he broadcasts out of Atlanta. His tagline is "finding ways to help you save more, spend less, and avoid getting ripped off".

Good luck!

[Will'sdad]

These guys are known for their low fee funds. They have a great track record as well. It's a good place to start.

http://www.vanguard.com/VGApp/hnw/CorporatePortal

[Cubfan]

There a million fund families out there, my personal favorite is Vanguard. They have dozens of low cost funds.

As far as minimum investments; I think it depends on what you want to invest for. If I'm correct, most retirement accounts (IRA or Roth IRA) will generally have a smaller minimum (generally $1000). However general accounts are $3000. But each fund requirements might be different so you really do need to do some research.

This link here will list Vanguard's funds by asset class (money market, bonds, agressive stocks, etc), and if you click on the fund itself it will allow you to look at the fees, minimum investments, all that jazz.

http://flagship4.vanguard.com/VGApp/hnw/FundsByType

Feel free to ask more questions, I'm a self proclaimed mutual fund junkie.

[Don-Dad]

Open up an IRA unless your wife already has a 401k at work. This way you can write off up to $4000 on your tax return if you invest $4000 (I think it's $4000 now, up from $3000 the previous tax year)

I use Merril Lynch and we are in Evergreen and so far so good on performance, well my wife is in a higher risk and did better, can't remember the fund she is in.

[SGTDad]

First figure out what you're saving money for. If it's for retirement, then definitely go with an IRA. I forget the exact figures, but I think if you're under 40, a Roth IRA will give you a bigger benefit in the long run than a traditional.

Here's a quote of consumer reports recommendations from their website:

For investors starting out:
5 T. Rowe Price Personal Strategy Growth
TRSGX (large-cap blend)
58 Vanguard Asset Allocation
VAAPX (asset allocation)

Both funds offer diversification in stocks and bonds. Neither charges a sales commission, and both have low annual expenses.


For socially conscious investors:
4 Parnassus Equity Income
PRBLX (large-cap blend)
22 Ariel Appreciation
CAAPX (mid-cap blend)
47 Ariel
ARGFX (small-cap value)
61 Pax World Balanced
PAXWX (asset allocation)


For investors who want experience:
7 Clipper
CFIMX (large-cap value)
16 American Funds Washington Mutual
A AWSHX (large-cap value)
30 Weitz Partners Value
WPVLX (mid-cap value)
64 Vanguard Health Care
VGHCX (specialty--health)
69 Stratton Monthly Dividend REIT
STMDX (specialty--real estate)

These funds all have managers with more than 20 years of experience.

Good luck!

[floridamcmarion1]

Thanks for all of the advice! My eventual goal is retirement, but I need the money to also be available for emergency or other uses. One probable use is a house down payment at some point. While my wife is provided a home as part of her benefits, the trend in our state is going toward giving housing allowances instead of an actual home. That pays the mortgage and other bills, but you still need your down payment. This fund would help me be prepared for that. It could also get dipped into for college expenses or who knows what else. It very much has to be liquid. My problem for a low initial investment is that I really don't have any starter money to invest. It would really be good if I could start with $250 and set up a $250 monthly deposit.

[SGTDad]

The advantage of an IRA account is that for most investment companies, they will waive the minimum investment amount if you agree to some kind of automatic debit or direct deposit program. The disadvantage is there are restrictions and tax penalties if you take the money out of the IRA before 59 1/2. However, there are exceptions. You can take up to $10k out if you're a first-time homebuyer to cover expenses, and it can also be used for college expenses with no penalty. Here's a great article with everything you'd want to know about IRA's:

http://www.fool.com/money/allaboutiras/allaboutiras.htm

Most regular (non-retirement) mutual fund accounts do have minimum investment requirements which vary by the company and fund. I do think many have a "starter" fund which has a lower minimum investment ($1000 instead of $3000). You can put your $250 a month into a separate savings account at your bank for a few months until you get the $1k or whatever the minimum is for that companies cheapest fund. That also gives you time to research what you want to invest in. After opening your starter fund and investing $250 a month for several months, you'll have enough money in the starter fund to move it all into the fund you'd really like to invest in.

For a lot of great information and advice on investing, check out the Motley Fools:

http://www.fool.com/

[floridamcmarion1]

Thanks for all the advice!! I ended up going with Fidelity. I was able to start with $2,500.00 and will be putting in money every month. There are no fees for mutual funds, and that includes quite a few non Fidelity funds. My account is very liquid (I can go from mutual funds to cash in my bank account in about 3 days). For a low fee I can also buy individual stocks if I so desire. Fidelity really fits what I needed, plus I like quite a few of their funds.

[SGTDad]

Great news! Fidelity is really good from what I've heard, though I don't have anything with them personally. Have fun watching that account grow (and shrink in a bad market)!

[Cubfan]

Sounds more like a brokerage account to me. Which isn't a bad thing at all, I would just watch out for the fees in buying and selling shares. They are generally much higher than you could get with an online discount broker.

[jungle jim]

Fidelity is what I use and they have been great. Great website, great customer service I cant say enuff good things about them.

[floridamcmarion1]

Fidelity is what I use and they have been great. Great website, great customer service I cant say enuff good things about them.

I've been very impressed with both the website and the customer service. I called them twice while setting up my account. Once for research questions and once because I locked myself out of my account. They were very helpful above and beyond what I needed. I also got a call yesterday to make sure I didn't have any questions about my account now that it's set up. I think I'll be very happy with them.

[jungle jim]

have you had a sit down with an advisor at a Fidelity location? I'd recommend it. You can research just about every option they offer on the website but having the meeting with the advisor helped me a lot.
I've been with them for 5+ years now.
Good luck

[floridamcmarion1]

have you had a sit down with an advisor at a Fidelity location?

I have not. At this point I probably won't, but as my portfolio grows I probably will. I really like having advisors available for free by phone. I am sure I'll use them once in a while when I'm deciding which additional funds to buy.

[Jackson's Dad]

I've been very impressed with both the website and the customer service.

Finding a place like that is the key. I've been with Schwab for a while, and have always found their customer service folks to be very helpful.