youngster starting on mutual funds

[beariebird]

Hi everyone,

I'm 23 and ha've been contributing to my Roth IRA for a couple years now, but only recently have decided to look into mutual funds (Before I let my father play around with stocks. Not the best idea, but at least I didn't lose any money).
I'm thinking about investing 2500$ in the following: RYVPX, TEQUX, and UMBIX. They're all top-rated by Morningstar, but I don't know what other characteristics I should be taking into account.

Any suggestions or recommendations?

Thanks!

[Ima saver]

Re: youngster starting on mutual funds

You need to get into a no load mutual fund with low expenses. I would suggest Vanguard which will open a fund with $3000. I like the Index 500, the Star fund, and the total market fund.
What are the names of the funds you are interested in?

[Ima saver]

Re: youngster starting on mutual funds

Bear, I looked up the first one, it is well rated, Royce value fund. It is good, but it has expenses of 1.17% plus a 12b-l fee of .25%. Vanuard funds usually have expenses of less than .40%, many under .30%

[Ima saver]

Re: youngster starting on mutual funds

I checked out the other too also, they too have expenses of 1.09% and 1.07 plus tequx has a 12b-1 fee also of .25% I would stick to Vanguard. The first fund is small cap stock the 2nd one is large cap stocks and the last is a large value cap stock fund.

[beariebird]

Re: youngster starting on mutual funds

Thanks for the advice, Ima saver! Out of curiosity, when would someone ever invest in funds with high expenses or fl/bl?
Also, according to Morningstar, none of the funds I mention have a fl or bl
Would you recommend that I invest more aggressively (more small/medium-cap growth funds)? I guess I'm looking for a suggestion for a general breakdown with how much I should put into foreign investments, large/med/small-cap investments, etc.

[Ima saver]

Re: youngster starting on mutual funds

If you go with a total market fund, you will cover most catagories. If a fund has a great manager, people will go with a hot fund, no matter what the expenses. When i was younger, I opened a fund at Fidelity Magellan just because a guy named Peter Lynch ran the fund. It is the only fund I ever opened that was a load fund!
You sound like you have done your homework. I don't know what a fl/bl is?? Enlighten me please??
I made the mistake of opening too many funds when i got started. I wanted to be in all of them and the minimums were small ($50) Later I regretted that and sold several of them. Then I had to pay capitol gains tax.
Start with just one or two! i would suggest large cap and small/medium cap.

[Fern]

Re: youngster starting on mutual funds

Thanks for the advice, Ima saver! Out of curiosity, when would someone ever invest in funds with high expenses or fl/bl?
.

I guess the answer would be, the same people who make other purchases without shopping around.