Time To Invest In Financial Mutual Funds
July 15, 2008
The stock market has been very scary for a while now but especially today. Friday night Indymac failed and the Feds steeped in to take over. I read people where lined up at the bank to take their money out. But here is the thing how far can all the big banks and financials go down? It might be time to start nibbling at some mutual funds or index funds that invest strictly in the financial sector.
This is a very contrarian play but it might be a good long term investment to pick up some mutual funds specialing in financial stocks. When you think about it all the banks can not go to zero or the United States will be a complete mess and no one will have money. The government is going have to step in and save all the banks. So looking at it this way pretty much all financial stocks are looking like great deals for long term investing. Mutual funds work great for this situation since they invest in lots of financial stocks. Some of the Janus funds that only invest in the financial sector might be a good play right now. It would be to risky to invest in individual bank stocks since you never know which ones will fail. But investing in a lot diversify the risk and should give you some nice long term gains.
Mutual Funds In The Current Market
July 9, 2008
So how is everyone’s mutual funds doing in the current stock market. If you are like most people you probably are not doing very good. Over the past year the DOW was a little over 14,000 and closed today at about 11,400. That is a big drop. The credit crisis does not seem to be cleared up yet. But the CEO of JP Morgan was on CNBC today and did seem to calm some fears.
When the markets are getting beat up like they are now its important to be in mutual funds with low fees. This is when its nice to have quality funds that don’t have crazy fees like the best vanguard funds. People seem to forget that they pay fees when their mutual funds go up or down. They are coming out all the time. Nothing hurts more than seeing your fund lose money plus you also get charged a fee even when you are already losing lots of money.
Also when the markets are tanking many people will sell out of their stocks and mutual funds. Now this might be a good idea if you need the funds on a short time frame. But it has been proven time and time again that it is all but impossible to time the markets. Instead of putting a set amount each month into their mutual fund portfolio some people will try to time the market and invest a lot at one time when they think they picked a bottom. But if you look at the chart of the the DOW or any other index how could you ever be certain you picked the bottom. With mutual funds you shouldn’t be trying to trade them like stocks. They are long term investments that you just continually keep stocking money away in. It is tempting to try to pick a bottom or sell your mutual fund at a top and then jump back in if it falls back but take heed from all the past investors who tried this method.
