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Discussion Starter #1
Hey guys I turned 18 about 6 months ago and looking to the future I'd like to invest in a mutual fund. I currently have an appointment with a fund manager this Thursday and am wondering if anyone has tips or advice as to questions to ask the fund manager as well as any ideas on bond to stock ratios. Finally what sectors are looking good for the foreseeable future?

Thanks, Joe
 

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My advice: look elsewhere for advice. Get some books on the subject, spend some time on investing or trading forums.

If you're sold on mutual funds, you need to get all of the specifics about the fees and loading, which they are required to supply as part of the prospectus. You're job is to make sure understand how they work so you'll know how the fees impact the performance of your money. You'll want to understand how often you can invest new funds or withdraw, etc.

http://www.fool.com/school/mutualfunds/costs/loads.htm

I applaud you for starting young.
 

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Discussion Starter #3
Thanks spam I'd like to invest in a back load fund focusing mostly on index funds for the long term. I'll check out some of those other forums and see what I can find, thanks!
 

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Learn To Swim
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Hey guys I turned 18 about 6 months ago and looking to the future I'd like to invest in a mutual fund. I currently have an appointment with a fund manager this Thursday and am wondering if anyone has tips or advice as to questions to ask the fund manager as well as any ideas on bond to stock ratios. Finally what sectors are looking good for the foreseeable future?

Thanks, Joe
My advice would be to not see the fund manager, and to never plan on seeing one in the future. If you're just starting out, then you have the entire world of personal finance in front of you. The thing you need to learn are many and are also basic. You do not need the help of a professional. A fund manager will offer advice that is in his best interest, as he will be taking his share off the top. Do you have an emergency fund? Are you contributing to a 401k if possible? A Roth IRA would be a great thing to start at your age, and you do not need a professional to start one. You can learn a lot at https://www.reddit.com/r/personalfinance/ and at your library or on podcasts.

There is almost no need to ever see a financial professional. If you are at a milestone in life and it deals with death and retirement, or your childs education or something very important, then a Certified Financial Planner can be helpful. But a "fund manager" does nothing that a passive index fund can't do, and they skim off the top. Look into personal finance, learn about index funds at www.vanguard.com, and I would cancel the appt. with that fund manager, or at least resolve to not commit to anything until you learn more about finances.
 

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Discussion Starter #5
I have a $500 emergancy fund as well as two weeks worth of food and water(family of five and the only prepper), i have my bases covered as far as my age goes. The guy I'm looking at as my manager is a family friend and is a good guy don't think he will try anything on me.
 

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Learn To Swim
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That doesn't mean he won't be making money off of you. Even if it's less than 1%. That amount can become huge over time, and it would probably be best to invest in a no load index fund. Just because you have a financial planner or fund manager in the family or as a family friend that doesn't mean they are the best option, or should be used at all.
 

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Look into ETFs as an alternative to mutual funds. These are bought and sold through a broker and trade like a stock which can have some advantages over mutual funds. There are a number of ETFs that specialize in sectors or specific strategies like oil or short S&P, etc.
 

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The Convicted Audiophile™
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Any reccomended funds in vanguard?
You should diversify
Buy multiple funds (within the same FAMILY)

You should do your asset allocations 1st
Something like this

You can do it yourself:thumb:
Each person has a diff allocation depending on their risk aversion and investment horizon....


Achieving Optimal Asset Allocation

If you have any questions or need help
You can PM me.... :)
 

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I recommend reading investment books before ever talking to a fund manager...

Motley Fool is good, but even the big fund websites have some good primers.

Read Dave Ramsey as well...

And max out IRA or 401K before you ever buy funds from a broker...you want all the tax advantages you can get.

Only other advice is to be prepared for the long haul, don't look at the investments daily, or even monthly, you are looking out 10+ years or more.

You also want to look at the fund's 5 yr. track record, prefereably 10. I never buy any new funds, and when the market is down is when you buy not sell. Think of it as wall street having a sale on stocks...
 

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Best suggestion is to learn about finances yourself and self direct your IRA. When you are starting out and have let's say $5K in your IRA as a starting investor, you'll be last on the call list from any investment company telling you modify, change or get out of those investments.
 

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Learn To Swim
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I've already taken 3 Dave Ramsey courses financial peace, legacy journey, and currently taking the one for High-schoolers.
You're falling for the many many financial traps here. You do not need to pay people to learn about finances. Think about what you're doing here. You're paying Dave Ramsey money so that he can tell you how to be better with your money. How can you be better with your money? Save it! Stop looking for people to give it to, Dave Ramsey or you family friend financial advisor. Go to the libray and read as many financial books as you can. Learn about frugality and saving. Build up an emergency fund of 3-6 months expenses. Max out 401k and Roth IRA. If you still have money left after all of these things, then read up on index funds and modern balanced portfolios. Then open a taxable investment account. There is no reason for you to be payingto learn these things, this should be rule number 1 for finances. Dave ramsey has enough money, he has so much that he gives 10% of it away! Stop giving him your hard earned cash.
 

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Read everything you can. learn from everybody you can. then open up your own account. Why pay someone else a fee every month when all the info is just a few clicks away.

It is great to hear that a young person is taking a interest in investment. seems like these days everyone (including older people) don't save a penny of have nothing for the future. I am near 40 and stashing every spear penny away right now. Like everyone else, I did not take interest in investments, or get mentored by someone. Time will be your biggest friend. the longer you have to invest, the better off you are!
 

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Any reccomended funds in vanguard?
just get an S&P 500 index fund. At your age you will be able to ride out any corrections.

Hardly any mutual fund beats a simple index fund. And Im not sure any do in the long run.

Investing is very simple, you can search the forums for my lemonade stand posts.

When investing in companies you are buying a tiny fractional ownership in that company. Ultimately what you want to do is determine if the price is good or bad. There is one simple way to do this, count up all the profits over some period of time and compare that to the price you pay.

For example if a lemonade stand is guaranteed to make 1000/year for 10 years how much would you pay for it?

You clearly would pay $1000 and clearly would not pay 10,000 (because you would just get your money back). Between these two numbers is a number that makes sense to buy. Buying stocks is the same way. The general method (called discounted cash flow) is to add up the forecasted profits for the next 10 years and compare that to the asking price. Tradition uses 10 years.

This effectively shows up in price to earnings (which is backwards looking). The S&P 500 has a price/earnings ratio of about 20 right now which means people are paying for 20 years worth of todays profits (too much in my opinion). This is a bit high as the historical number is probably around 15 or so. This does not mean a correction is imminent as the market can just go sideways and wait for companies to grow thus reducing their P/E. However a correction can also happen.

The reason why people are willing to pay such a high multiple (instead of say 5-6) is because the companies are expected to grow some.

So when doing this analysis

1) figure out how much profit you think the company will make over 10 years (this is hard but warren buffet has lots of good ideas about it)

2) Figure out how much % you could make from safe alternate investments (0% most likely, but if you have credit card debt, that is worth 18%)

3) Figure out how much the company is worth

4) Discount that to reflect that you dont know lots of things (I like to use 25%)

If I were in your shoes I would save a 6 month emergency fund first. Then start investing slowly over time into S&P 500 index funds. Keep building your emergency fund to 1 year then when a correction happens use about 6 months of your savings to buy cheap stocks.

Money is made when there is blood in the streets and everyone is running. Most people buy when everyone else is buying and sell when everyone else is selling.
 

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You Cant Eat ......
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just get an S&P 500 index fund. At your age you will be able to ride out any corrections.

Hardly any mutual fund beats a simple index fund. And Im not sure any do in the long run.
Sound advice here. IMHO, mutual index funds are great for the novice investor/the investor who cannot devote the time to actively manage his stuff.

One thing you need to watch out for mutual funds are the fees associated with them as that will impact your overall return.

I personally love the vanguard family of funds as their expense ratios are low and the returns are comparable to other funds.

One mistake i made in my youth is chase the "hot fund" with the big one year returns only to find out that year 2 was rarely, if ever good. Lost of ton of money there.
 

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You will be paying this fund manager, and that will hurt your returns. Seriously, don't give him any money.

If I were 18 I would just save my money in a savings account until I had enough for a down payment on my first home.
 
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