Best Vanguard Mutual Funds
February 5, 2008
One way to get the highest return on your investment is to find the best mutual funds that also have the lowest fees. All mutual funds charge you a small fee for their service of professionally managing your money and also to deal with all the administration fees. This fee can really eat into your profit each year. Think about it this way, if a mutual fund is charging you a 1% managing fee per year; and the fund returns 10% on the year, you only got a 9% return. Now that doesn’t seem like a big deal but that small percentage is hitting you every year; even when the fund goes down. If you can find the best mutual funds that also have the lowest fees you will have a good chance at out performing the markets most year.
Vanguard is a great company that is known for having some of the lowest fees in the industry. Combined with their proven track record, you have a winning combination. Liper did a study and found that on average Vanguard’s fees are just one fourth the cost of other mutual funds. That is a big savings, especially when your savings are compounded every year. If you could get the same or better return and pay a lower fee for it, then you better be going with the mutual fund company that charges the least.
A lot of times low cost is associated with bad quality or bad service. This is not the case with Vanguard mutual funds. Vanguard has been around since the mid 1970s and is now managing over $800 billion in assets. If they didn’t provide quality service and good returns they wouldn’t have been around so long and manage such a large amount of money.
Vanguard is a big name in the mutual fund industry and we will discuss more about them and all their different types of funds in future posts. The main point to take away from this post is that mutual fund fees can really hurt your return. Your goal is to find the best mutual funds that also have very low fees.
The Best Mutual Funds are Very Diversified
February 5, 2008
If your interested in buying mutual funds, one of the reasons most people buy them is because they can help diversify your portfolio. What is diversification and why is it good? Well it basically means your investing in many different industries and sectors. Any of the best mutual funds you buy will be spreading their money into small caps, large caps, Internet, industrial, and all kinds of different types of stocks. Having your funds diversified is good since all your eggs are not in one basket. Say you had all your money on line invested in Internet stocks back 2000. You would of lost tons and tons of money. But if you had invested in all kinds of different stock industries the damage to your portfolio would have been less significant.
Generally just buying one of the best mutual funds will help you be diversified but you need to keep in my some funds only invest in certain sectors. While sector funds will be a good way to play a lot of different stocks in say the banking or oil sectors they won’t give you a total diversification of being invested in all the sectors. Some of the best sector mutual funds can perform really good if things are on the up and up in that particular industry but you can really get hurt with them if you don’t buy into more generalized mutual funds to protect yourself.
Buying one of the best mutual funds that invests in all industries and is a great way to protect your self. Think of it this way; usually when one sector or industry is going up another one will be going down. By investing in all of them and being diversified you will be able to ride out the bumps and get a more overall average market return. Plus being invested in some of the best mutual funds will really help too.
