For most people the best mutual fund investment and the best investment strategy for 2011 and 2012 can be found in a single package, which comes complete with both fund and strategy. Before you invest money, here’s how to find the best fund with a strategy that fits you.
People invest money in a mutual fund because these investment packages offer professional management, each fund with its own investment strategy. The problem is that even the best fund in the stock or bond arena can get casual investors into trouble if they just buy, hold, and ignore it. The same stock (equity) fund that doubled in value between early 2009 and 2011 could well lose half its value if 2011 and/or 2012 turn out to be bad years for the stock market. History has proven that most people invest money without a sound investment strategy. They simply buy, hold and ignore.
Remember this: the normal investment strategy for a stock HULT PRIVATE fund is to invest about 98% of the portfolio in stocks. The same is true in the bond department. The best investment strategy for most people is to invest money in a variety of both stocks and bonds, with some money tucked away earning interest with high safety. If you don’t have the time or expertise necessary to invest money and stay on top of all three areas, what’s your best mutual fund to invest money in?
The best fund for most folks falls into a category called BALANCED, ASSET ALLOCATION, or TARGET RETIREMENT because the investment strategy here is to invest money in all three areas, while keeping the investor portfolio balanced (ratio of stocks to bonds) throughout the years. The TARGET types take investment strategy one step further by reducing risk over time to adjust for the fact that the investor is growing older. In other words, all in one package you get the best mutual fund complete with the best investment strategy for 2011, 2012 and beyond. You can simply buy and hold, and let management do the rest.
Now, let’s get more specific, using target retirement funds as our example. Investment strategy and portfolio asset allocation is usually described as CONSERVATIVE, MODERATE, or AGGRESSIVE. The higher the target number, the more aggressive (risky) a target fund is – meaning a higher allocation to stocks vs. bonds and safer investments. For example, a Target 2000 might be labeled as conservative with 20% of the portfolio in stocks, while a Target 2035 labeled as moderate could have 80% invested in stocks. Look at the asset allocation percentages before you invest money! A target fund with a target number higher than 2040 can have 90% of assets invested in stocks.
With all of the uncertainty surrounding 2011 and 2012… including high unemployment, a sluggish economy, and the threat of higher inflation… many people need a more conservative fund in order to sleep at night. If you can relate to this the best mutual fund investment for you might be a Target 2000 with about 20% of its portfolio in stocks, 35% in bonds and 40% in safer areas that pay interest. Or, you might want to invest money in a Target 2010 with about 50% in stocks and most of the rest in bonds.
You can make the best of it in 2011, 2012 and beyond if you do a little homework before you invest money. Go to websites like Fidelity and Vanguard, the two largest mutual fund companies, to get a handle on the best mutual fund that fits your risk profile. If you want to just invest money and hold on, your best mutual fund investment is some form of balanced fund where the fund company takes care of the investment strategy for you.