I have 5k to invest in stock market but do not want to select individual stocks. I would do it through mutual funds. I am willing to accept a moderately high amount of risk. How can I find a good mutual fund that meets these criteria?

  • 1
    Harry, where are you located? U.S.A., or elsewhere? – Chris W. Rea Jan 17 '11 at 1:14

Just find a low cost S&P 500 index fund, and spend your time reading The Great Mutual Fund Trap instead of wasting your time and money picking actively managed funds.

  • 38 or so shares of SPY (about $5k) can be bought (and later sold) for under $10 per transaction at several brokerages. Low cost, liquid, easy. – bstpierre Jan 18 '11 at 3:58
  • 1
    Vanguard's VOO isn't quiiiite as liquid but it's pretty close and if you have a Vanguard brokerage account, you can trade it for $0 per trade. That's right, free. Also, its expense ratio is .06% to SPY's .09%. Not that both aren't dirt cheap. – user296 Jan 18 '11 at 16:44

The "Money 70" is a fine list: http://money.cnn.com/magazines/moneymag/bestfunds/index.html

Money magazine is usually more reasonable than the other ones (SmartMoney, Kiplinger's, etc. are in my opinion sillier).

If you want a lot of depth, the Morningstar Analyst Picks are useful but you have to pay for a membership which is probably not worth it for now: http://www.morningstar.com/Cover/Funds.aspx (side note: Morningstar star ratings are not useful, I'd ignore those. analyst picks are pretty useful.)

Vanguard is a can't-go-too-wrong suggestion. They don't have any house funds that are "bad," while for example Fidelity has some good ones mixed with a bunch that aren't so much. Of course, some funds at Vanguard may be inappropriate for your situation. (Vanguard also sells third-party funds, I'm talking about their own branded funds.)

If getting started with 5K I think you'd want to go with an all-in-one fund like a target date retirement fund or a balanced fund. Such a fund also handles rebalancing for you. There's a Vanguard target date fund and balanced fund (Wellington) in the Money 70 list.

fwiw, I think it's more important to ask how much risk you need to take, rather than how much you are willing to take. I wrote this down at more length here: http://blog.ometer.com/2010/11/10/take-risks-in-life-for-savings-choose-a-balanced-fund/

First pick your desired asset allocation, then pick your fund after that to match.

Good luck.


Vanguard has a lot of mutual fund offerings. (I have an account there.) Within the members' section they give indications of the level of risk/reward for each fund.

  • 3
    Here's the page you're looking for. It's not a members-only section. personal.vanguard.com/us/funds/vanguard/core -- sounds like the poster might appreciate the Wellington fund, VWELX? – user296 Jan 18 '11 at 16:47

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Not the answer you're looking for? Browse other questions tagged or ask your own question.