Is it wise to put all savings and investments in mutual funds?
I'm a beginner to the world of investing, but the way I have been doing this is saving $150 a month to a savings account, $150 a month to mutual funds, and $150 a month to a retirement account. Obviously when as my income increases, so will my monthly saving rates. Unless my little sister is being held for ransom, I will not touch any of it for the next 40 years at retirement age.
But I was thinking--why not put the whole thing in mutual funds since it is the lowest risk and the highest returns?
What would I risk putting everything in mutual funds every month?
- DreamweaverLv 49 months ago
I would strongly advise you to go to at least 3 places. Vanguard, Fidelity, and Morningstar. They have very good sites for investors like yourself. I have no interest in Vanguard but, i have found the best answers on their page. I have also learned that they have some of the lowest costs. Diversity is the key to all investing. People in this forum, mean well, and have some great ideas. Unfortunately or not, we do not know the particulars of your life, and what you are comfortable with. Good luck
- BryceLv 79 months ago
Keep cash to last six to eight months for emergencies and the rest can go to the mutual fund.
- SamLv 79 months ago
I think you are doing it right. You may want to look at s&p index fund instead of mutual fund, they are lower costs over the long haul especially and diversified to match the s&p. Have a cash fund liquid for example 4 to 6 months worth, so you could always job hunt if necessary and move if necessary, it will give you a level of comfort.
- Anonymous9 months ago
A mutual fund is an investment pool. It is not a specific type of investment. A mutual fund could contain anything from Asian small cap stocks to USA dividend paying stocks to US Treasury bonds or mortgages.
A retirement account is not a specific type of investment either. It is an investment account that has specific rules for contributions, withdrawals and tax treatment.
You can own mutual funds inside a retirement or outside a retirement plan.
Yes, investment pools (mutual funds) are an inexpensive and easy way for someone with not a lot of money to diversify their investments and have professional management. For you, mutual funds sound perfect.
But you need to realize that there are a zillion different mutual funds and as I said earlier, any particular fund can have vastly different investments than another.
Yes, if you're 40 years from retirement, growth stocks are where it's at. So growth stock mutual funds would be a wise choice. Make sure you pay attention to the fund's long-term performance and expense ratios. There are some really good funds and some really crappy ones. I'm partial to Fidelity as they have some great aggressive performers with low expenses and several of them have proven to be less volatile than index funds in a correction/recession.
You're on the right track for sure! But your understanding of the basic terms you are using needs a bit of work.
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- JudyLv 79 months ago
Some of your savings should be somewhere readily accessible and does not fluctuate, for an emergency fund.
- StephenWeinsteinLv 79 months ago
You will need some of it before retirement, for buying a house, medical bills, or some other expenses.
- The TaxpayerLv 79 months ago
You've done fine.
- Anonymous9 months ago
Probably at least 80% depending on your situation. Of course paying off any & all debt is usually a better idea.
Very little long term risk beyond a big market downturn which are impossible to predict.