I reach my majority in May, becoming the legal custodian of funds that have been giving me a headache for years. They're currently invested with Raymond James, and have declined quite a bit since the fund was born in 85. I'm thinking that moving the money would be a good idea, but I don't know what a good alternative would be. Worse is that I don't know enough about money to find indicators of a good investment firm, myself. Any suggestions?
Posted by Tatiana (Member # 6776) on :
I use Morgan Stanley, but the truth is that nobody can invest your money more wisely than you can yourself. If you educate yourself about the options that are out there (by reading the Wall Street Journal, Forbes Magazine, etc.) and you know what you want out of your investment, then you'll be able to do as well as the pros do.
I make my own decisions about what to buy and sell, and I much prefer it that way. Some brokers make more money by encouraging you to buy and sell more often, for instance. The best way to know that your money is handled in the way that's in your best interest, rather than someone else's, is to make the decisions yourself.
Posted by Dagonee (Member # 5818) on :
I generally keep money that I want to grow and that I won't need in the foreseeable future (10 years or so) in an index fund, such as Vanguard Total Stock Market Index. There are also asset allocation funds, which keep your investment in a particular asset mix even as values fluctuate. If the money is for long-term growth, an 80/20 ratio of stocks to bonds is the minimum you should have.
It will fluctuate, and it will decline in some years. You have to be able to handle that. If you can't take it, then there are safer investments that return less you should look in to.
Posted by Tatiana (Member # 6776) on :
If you want something very stable, but with a modest growth rate, for instance, then utility stocks are a great idea.
If you want something totally safe, but with a very modest growth rate, buy U.S. Treasury notes.
If you want something with more growth potential, and you know a certain industry well enough to feel you know who will perform well in that industry, then invest in them. For instance, Google is a company that I have a lot of personal faith in, so I like their stock. (Don't buy it on my recommendation, though! You pick your own companies!)
Be sure and diversify, so that you don't lose everything in the event of a downturn. Don't do only tech stocks, for instance, or only one or two companies. Depending on how much you need safety vs. growth, you might invest no more than 25% of your holdings in one type of investment.
Posted by TomDavidson (Member # 124) on :
If they're just causing you problems, I'd be happy to babysit them for you.
Posted by fugu13 (Member # 2859) on :
If its a really substantial amount of money, pay somebody to manage it. Find that person by getting a few local recommendations then talking with the people recommended.
Posted by Enigmatic (Member # 7785) on :
I use Vanguard as well. The advantage of an index fund is they are low maintanence. Moving investments around with lots of buying and selling generally has broker or fund-manager fees. That means some mutual funds will show a good rate of return but what you actually see from it is decreased because of the higher maintanence fees.
Also, for long term (ie retirement) savings its a good idea to put as much as you are allowed (I think it's $3k/year) into a Roth IRA. You can only put post-tax income into a Roth, but the advantage is it isn't taxed when you take it out. So if you put $3000 into a Roth IRA now and take it out 50 years from now when you retire you're not paying tax on the profit you've made by having it in the fund. The earlier you put money into a fund like that, the better off you'll be.
--Enigmatic
Posted by fugu13 (Member # 2859) on :
If you're investing for the long term (since you've just reached your majority, I'll assume you are), an index fund as your main investment is probably a bad idea. Its too conservative. A more aggressive fund mixture (there are plenty that follow simple strategies and so can keep fees just as low) is appropriate for the long term, and risk can be hedged by a substantial minority holding in an index fund. You will make a lot more money over a long term investment (say, thirty to fifty years) than an index fund strategy will.
Posted by Dagonee (Member # 5818) on :
fugu, that just can't be true in general. Index funds will do slightly worse than the market being indexed as a whole.
Non-index portfolios will also, on average, do slightly worse than the market being indexed as a whole.
For every gain above that average, there must be corresponding losses.
Certainly some fund managers will do better over any arbitrary period. But there's no sure way to predict that in advance.
I'd also be interested to see a managed fund with a long-term record of beating the market, a current size that makes it likely to continue to be able to beat the market, and a .28 expense ratio.
Posted by fugu13 (Member # 2859) on :
Dagonee: not at all. There're some other tendencies in the stock market that result in additional effects, because stocks are not homogenous. By paying attention to these general tendencies, higher gains may be yielded, albeit at a slightly higher risk that one will not outperform the market.
I'm not even saying something that's not an index fund; I'm saying an index fund that doesn't index the whole market (or a relatively bland subset such as the S&P 500). For instance, Vanguard has a growth index fund worth paying attention to.