67 votes
Accepted

What is the worst thing that can happen with my investment in mutual funds?

From a comment: do I lose the principal amount too? You misunderstand what investing means: when you buy stock shares (directly, or indirectly via a mutual fund) with your money, you buy those ...
RonJohn's user avatar
  • 50.7k
51 votes
Accepted

Should I sell mutual funds that are performing well or poorly first?

In most situations it doesn't matter, but not because it is gambling. The only reason it would matter is if you had a bump in income and are expecting a higher marginal tax bracket in the year you ...
JohnFx's user avatar
  • 53k
48 votes

Should I open a Roth IRA or invest in the S&P 500?

Your question indicates confusion regarding what an Individual Retirement Account (whether Roth or Traditional) is vs. the S&P 500, which is nothing but a list of stocks. IOW, it's perfectly ...
RonJohn's user avatar
  • 50.7k
45 votes

What does 'mutual' mean in mutual fund?

"Mutual" as in "owned and funded by a pool of investors for a shared purpose". Some more details on the more generic concept of a "mutual organization" can be found in ...
littleadv's user avatar
  • 174k
44 votes
Accepted

Is putting money in a 401(k) plan risky?

Mutual fund investments within a 401(k) plan (or outside a 401(k) plan for that matter,) are NOT covered by the FDIC regardless of whether the plan administrator is FDIC-insured or not; they are not ...
Dilip Sarwate's user avatar
39 votes
Accepted

Is 401k as good as it sounds given the way it is taxed?

Your analysis is not comparing apples to apples which is why it looks like investing money in a non-qualified account is better than a 401k (traditional or Roth). For the non-qual you are using post ...
Eric Johnson's user avatar
  • 2,427
39 votes
Accepted

What should I do with the stock I own if I anticipate there will be a recession?

The answer to this question depends heavily on your ability to accurately predict a recession. Hypothetically speaking, if you were 100% accurate with your prediction, the obvious choice would be to ...
daytrader's user avatar
  • 2,232
34 votes

Does dollar-cost averaging just means taking risk later?

The paper you are referring to is likely the Vanguard report Dollar-cost averaging just means taking risk later. The thrust of the paper is that lump sum investing outperforms dollar cost averaging ...
Magua's user avatar
  • 5,097
28 votes

Is putting money in a 401(k) plan risky?

Investments are usually insured by SIPC instead of FDIC, however it is a different kind of protection. Essentially it just protects you from the broker going under, not the investment losing value. ...
JohnFx's user avatar
  • 53k
26 votes

Why a bank would propose a depositor to invest part of their money to mutual funds, instead of bank doing it itself?

Banks investing their depositors money is extremely, and systemically, risky. What if those investments lose money, even if just for a little while? The bank could collapse and the depositors could ...
Michael's user avatar
  • 2,365
22 votes

What are the important differences between mutual funds and Exchange Traded Funds (ETFs)?

Behind the scenes, mutual funds and ETFs are very similar. Both can vary widely in purpose and policies, which is why understanding the prospectus before investing is so important. Since both mutual ...
Ben Miller's user avatar
  • 116k
22 votes
Accepted

Is losing money in my 401K normal?

Depends on how the money is invested within the 401k... but in general, prices move both up and down with a long-tem bias toward up. Think of it this way: with fund shares priced lower now, you are ...
keshlam's user avatar
  • 46.5k
21 votes

Why would a long-term investor ever chose a Mutual Fund over an ETF?

First, it's not always the case that ETFs have lower expenses than the equivalent mutual funds. For example, in the Vanguard family of funds the expense ratio for the ETF version is the same as it is ...
Nobody's user avatar
  • 2,082
21 votes

If a mutual fund sell shares for a gain, do investors need to pay capital gains tax twice?

Yes, you pay capital gains tax on ETF holdings just like mutual find holdings, but you are not "double taxed". Say you buy a fund at the beginning of the year and sell it at the end of the ...
D Stanley's user avatar
  • 135k
21 votes
Accepted

Mutual funds question: “You need to spend money to generate income that’s sustainable, because if you don’t, then you end up eroding your capital,”

TL;DR: Either Cox or the reporter or the editor misspoke, misquoted, quoted out of context, or just plain misunderstood. The quote as it stands strikes me as nonsense. You need to produce sufficient ...
keshlam's user avatar
  • 46.5k
20 votes

Why don’t index-tracking mutual funds corner themselves?

There are several things to keep in mind: First, as Dilip's answer says, there are many indices, with different aims, so the number of "hot" stocks that someone would need to potentially target is ...
TripeHound's user avatar
  • 9,171
20 votes

Why a bank would propose a depositor to invest part of their money to mutual funds, instead of bank doing it itself?

There are a few things going on here. First, banks can't just invest all their depositors' money in mutual funds. Banking relies on the idea that when you deposit money today, the bank will definitely ...
Zach Lipton's user avatar
  • 1,097
20 votes

Should I sell mutual funds that are performing well or poorly first?

Looking at past performance of stocks when making decisions is a common fallacy in stock investment. Past performance is irrelevant. All that matters is whether you expect the stock to raise or fall ...
Philipp's user avatar
  • 23.9k
15 votes

Should I be disappointed with my investment returns?

Unfortunately, yes, I think I would be disappointed. For an investment that grows from $46,000 to $58,000 in 10 years, the Compound Annual Growth Rate (CAGR) is 2.35%. The CAGR of the S&P 500 ...
Ben Miller's user avatar
  • 116k
15 votes

Is 401k as good as it sounds given the way it is taxed?

There are 3 options (option 2 may not be available to you) Traditional 401k Roth 401k Taxable investment account When you invest 18,000 in a Traditional 401k, you don't pay taxes on the 18k the year ...
Michael's user avatar
  • 1,181
15 votes

What should I do with the stock I own if I anticipate there will be a recession?

If I anticipate a recession should I sell the stock I have, That's market timing. and then wait for everything to bottom out and then resume dollar-cost-averaging? Or should I just proceed as ...
RonJohn's user avatar
  • 50.7k
15 votes
Accepted

Gnucash Mutual fund changes number I enter

This is the problem: Security/currency: USD (US Dollar) You have told GnuCash that the account holds quantities of USD, and thus it expects that the “price” is exactly 1 since you are “buying” USD ...
Kevin Reid's user avatar
14 votes

What should I do with the stock I own if I anticipate there will be a recession?

Remember the golden rule: Buy low, sell high. The reason everyone is afraid to give you the obvious advice is that they're afraid you won't do that. And on average, they're right as rain. What ...
Harper - Reinstate Monica's user avatar
14 votes

Role of fees in mutual funds: Is it exaggerated?

The problem you have is picking the fund that can overcome the higher fees to beat the low cost index fund. You have to know which funds will over the next 10 years beat the index by enough to ...
mhoran_psprep's user avatar
13 votes

Is 401k as good as it sounds given the way it is taxed?

Before anything, I see that no one mentioned the one thing about 401(k) accounts that's just shy of magic - The matching deposit. In 2015, 42% of companies offered a dollar for dollar match on ...
JTP - Apologise to Monica's user avatar
13 votes
Accepted

How to automatically reinvest in non-dividend paying funds

I think you are overcomplicating things. In the case of a stock / fund which pays no dividends / interest, your investment automatically 'reinvests' any growth directly into the value of a stock. ...
Grade 'Eh' Bacon's user avatar
13 votes

Should we really be looking at the expense ratio while choosing funds?

Past performance accounts for the expense ratio, but is (proverbially) not indicative of future results. In particular, going by past performance and choosing a fund that has recently beaten the ...
nanoman's user avatar
  • 29.7k
13 votes

For mutual funds, can you pay capital gains taxes even if you sustain a loss (as this article implies?)

Yes, it is possible to pay capital gains tax while holding a mutual fund that has gone down in value. Mutual funds have something called “capital gain distributions.” Inside a mutual fund, when a ...
Ben Miller's user avatar
  • 116k
13 votes
Accepted

Mutual Fund Fees

Yes, mutual fund fees subtract directly from your growth rate. Fees should be one of the first things you look at when comparing funds. Note that one of the reasons index funds did surprisingly well ...
keshlam's user avatar
  • 46.5k
13 votes

How to maintain NAV (Net Asset Value) for family fund

This is working fine for tracking purpose, however, now I have a need where multiple family members would invest (add funds) and the NAV is calculated accordingly. Next, when any of the family member ...
mhoran_psprep's user avatar

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