AboutWarren Boroson Expertise Author of "Keys to Investing in Mutual Funds" (Barrons), "Ultimate Mutual Fund Guide" (Probus), "How to Pick Stocks Like Warren Buffett" (JKLasser), and "The Reverse Mortgage Advantage" (McGraw-Hill). Former financial columnist for Gannett News Service.
Experience Author of 20 books; winner of 1996 Personal Finance award from Investment Company Institute and Washington University. Formerly on staffs of Money and Sylvia Porter's Magazine. Had a radio program (on WEVD) about mutual funds and a newsletter, FundDigest.
Question I am a 17 year old guy, who is thinking of investing a total of $2000 into mutual funds. My concerns are
1.What type of fund should i invest in
2. the managers investment style.
3.funds objectives
4.returns on the fund ( 1,3,5,10) years
5.MER
6. top 10 holdings in the funds assets mix
7. the load options
8. An application form from the selling institution
D.A. copy of the funds prospectus.
10. Any other Information
Sorry for loading you with all the question but this is going to be an aggressive and long term investment and i wanted to make sure that i could get the best advice possible.
Answer Dear Faizan Zaheer:
At 17, you may want to put aside money for advanced education. Or to buy a house. Beyond that, you should consider health insurance, if you don't have any coverage, and an emergency fund. So perhaps you shouldn't invest that $2,000 very aggressively.
The answers to your questions can be found in Morningstar Mutual Funds, a newsletter that can be found in larger libraries. It can answer such questiions as a fund's objectives, top ten holdings, returns from the fund, and so forth. M* also rates funds that have been in existence for at least three years; the analysts also recommend funds--and the funds recommended don't necessarily earn five stars. (Main reason: The manager of a five-star fund may have left.)
I would suggest that you invest in a balanced fund--a mix of stocks and bonds. Reason: If you need money, and stocks have retreated, the bonds will have kept your investment somewhat intact. A decent choice is Vanguard Balanced Index, an index fund of stocks and of bonds. Index funds are well diversified and inexpensive; and Vanguard is one heckuva class act. It's no-load, of course.
Call Vanguard and ask for a prospectus and an application. The minimum first investment is $3,000, unfortunately, but perhaps you can raise another $1,000. If you cannot, another decent choice is Vanguard STAR, where the minimum first investment is, I believe, only $1,000. Fidelity Balanced has a minimum of $2,500, and that's a good choice, too.
I don't blame you for wanting to put your money to work as quiickly as possible. But you should read up on the subject. You can get tons of free literature from the fund families I mentioned. (Another impressive family: T. Rowe Price.)
