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9 Great Reasons to Own Funds

Mutual funds are the best way to diversify, buy stock in small and large firms, and also get the knowledge of the fund manager for a price.

1. Cash in on big returns: Over time, stocks of big companies have made about 10% per year, on average, and stocks of smaller companies, about 13% a year. Compare that with the sub-5% return from a bank account or even short-term Treasury bills, and funds that invest in stocks and bonds blow away the competition. …


2. Hire top-notch help: When you invest in a mutual fund, you hire professionals. These pros don't dabble in stock picking on evenings and weekends; they do it full-time. …


3. Diversify for cheap: Managing a big portfolio of individual stocks and bonds is expensive, and trading costs can quickly eat up your profits. By comparison, funds are cheap. …


4. Spread your wealth: Dividing your money among different types of investments is called asset allocation. Studies have shown that investing in different types of assets is even more important to your wealth than the specific investments you own. …


5. Start small: Don't have a lot of cash to start your nest egg? Several fund families, including Ariel Funds and T. Rowe Price, let you begin investing in their funds for only 50 bucks a month, if you contribute monthly. …


6. Expand your horizons: With mutual funds, you can venture outside your realm of expertise to make money. …


7. Ease yourself in: A technique known as "dollar-cost averaging" means that you invest small amounts periodically -- say, once a month or once a quarter -- instead of investing a lump sum. …


8. Make a quick getaway: When you need your money, you can sell mutual fund shares for free any day the market is open. …


9. Delegate your portfolio: Even a good fund portfolio needs to be tweaked from time to time. If you don't want to bother, target retirement funds will do the tweaking for you. …

Read complete article at Kiplinger.com: 9 Great Reasons to Own Funds

20 biggest no load funds

This is a nice list (with reviews) from Kiplinger.com of the biggest mutual funds with the lowest fees, that have sustained performance over the last several years.

Some of the top funds:

Vanguard 500 Index Inv (VFINX)
Vanguard Total Stock Market Index Inv (VTSMX)
Fidelity Contrafund (FCNTX)
Dodge & Cox Stock (DODGX)
Vanguard Windsor II Inv (VWNFX)

To read more click here.

The Best Place for Your Money

So you've been saving money and have put away enough for a 'rainy day fund', and have some left over. The next question usually is what to do with the cash. You could put it in a high-yield savings account like INGDirect or HSBC, put it in bonds, mutual funds, stocks, the options are limitless.
Another thing that factors into the equation is your risk aversion, which is, or at least should be decided by your age and the stage of life you are in.

Fool.com has some ideas on what the best place for YOUR money might be.

More here.

Stock Market Crash

I hope the 400 point dive on Tuesday didn't hurt you too much. Couple of my stocks took a slight beating, but nothing major. CNNMoney's Gerri Willis lists some tips to survive a volatile stock market which I am sure all us amateur investors can use. :

Volatile stock market survival guide
After a 400-point drop in the market Tuesday, Gerri Willis gives you tips on how to cope.
By Gerri Willis, CNN
February 28 2007: 11:31 AM EST

NEW YORK (CNNMoney.com) -- Stocks plunged Tuesday with the Dow Jones Industrials losing more than 400 points. It was the worst day in 5 years. Markets stabilized Wednesday morning, but the drop is still a loud wake-up call to investors. We'll tell you how to protect your investments if the stock market does tank.
Don't panic

Selling in a panic is almost always a mistake. Remember, the stock market has been gaining ground for 8 months. The market is overdue for a significant correction, says David Wyss, an economist with Standard & Poor's.

Let's put this in perspective. A normal market correction is eight to 10 percent. The sell-off that we saw is only about three percent and we haven't seen a significant correction since 2003. If you're invested in a 401(k) for thed long-term, you shouldn't be concerned with the day-to-day gyrations of the market, says Doug Flynn of Flynn Zito Capital Management.
Look past the bottom line

Don't just look at what you may have lost in your portfolio. Take a longer view of the market. This is a good time to really analyze what kind of investments you're in. If you are a 401(k) holder, go to Morningstar.com and find out what companies you have in your portfolio. You want to make sure you have a diversified mix of stocks, bonds, cash and real estate investments. That's the best way to hedge your bets against a falling market.
Consider your time horizon

If you are only a year or two away from retirement, it's a good idea to revisit your investments. It's easy to get swept away by months of positive stock returns.

The bottom line here is that the closer you are to retirement, the more conservative you should be. If you do have a long time before you retire, the more aggressive you should be. To figure out some good allocation mixes, here are somecalculators to help you out.

Professional investors are worried that the economy is slowing down. Just a little while ago the Gross Domestic Product numbers were revised downward. And these GDP numbers measure the nation's economic activity. Add to this fears of a weakening housing market and comments from Alan Greenspan about a possible recession and...there's a lot of worry out there.

Analysts we spoke to said it's very likely that there will be more declines in the stock market before the market regains its footing. So you may just want to steel yourself.

Really simple investing

Interesting article on Kiplinger today for us lazy investors who do not want to get in and out of positions every day. I think I am going to try it out and maybe check back in a few months to gauge performance.
Link