AboutJohn D Smith, CFP Expertise I can answer detailed questions regarding mutual fund investing, retirement planning, education planning and related financial planning/investment issues. I have a B.S. degree in Financial Planning & Counseling. I am also a Certified Financial Planner practitioner and have performed fee only investment management and financial planning services for the past 11 years.
Expert: John D Smith, CFP Date: 11/22/2004 Subject: Mutual Fund Advice
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Hello Mr. Smith, I am 21 years and want to buy a mutual fund and continually add to it every month, perferably a no-load fund. I have 3,000 of extra cash layin around doin nothin. What do you think is the best fund I can purchase with $3000 dollars? And what are some good international funds?
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The answer to this question depends on several factors, including your specific risk tolerance, rate of return goals and investment time horizon. If you would like to expand a litte bit more on this, I will be glad to offer some guidance. In the mean time, you may want to visit www.vanguard.com and enter under the personal investors portion of their website. There is some great information on mutual fund investing under the planning and advice tab. Please get back in touch with further clarification about your goals and I will try to offer some assistance.
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I have a medium to high risk tolerance. I have money avalible for my day to day life and most likely will not lose sleep over investments that I am comfortable with. I would like a rate of return at around 10% (if possible anymore). I heard vandgard has good funds, which are the most popular ones?
Answer A 10% required rate of return is a bit ambitous, however, the stock market's long term rate of return is around 11%, so a 100% stock portfolio over time should return around 10%. With that being said, I would make sure you have a diversified portfolio that includes large US, small US and international stocks. For $3000, you could use the Vanguard STAR fund, which is a balanced fund consisting of a diversified portolio of stocks and bonds. Over time, it may be tough to earn 10% per year with this fund, but it should return in the upper single digits. For a 100% equity fund, the Vanguard Total Stock Market fund in my opinion would be a good choice. As you start to accumulate more savings, then incorporating more specific funds investing strictly in small US and internation companies would be my recommendation. Again, visiting the Vanguard website should turn out to be time well spent. They have great information on mutual fund investing and the importance of diversification. I hope this helps.
