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Funds or Stocks
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Nostradamus
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25-Sep-2006 18:21
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Some managers are quite forthcoming about the reasons for their investment decisions and what they've learned from any mistakes.
Such open-minded fund managers are keepers for your short list. Honest and timely messages from managers show respect for shareholders that likely extends to other important, investor-friendly attributes: low expenses, investment consistency, strong research analysis, sound corporate governance and managers' own money on the line. Understand a manager's strategy and see that their actions are consistent. Annual expenses eat into total return, year after year. studies show that low-expense funds are more likely to outperform their costlier counterparts over time. Maybe you've found an attractive fund with a great multiyear track record. But just how attractive the fund is will be determined by how the manager generated that return. Better to invest with a manager who delivered superior gains with minimal risk. Funds of the same stripes will likely hold many duplicate stocks. This is especially true of large-capitalization funds, where companies with the biggest market values tend to command a meaningful chunk of the portfolio's assets. Don't be a fund collector. Copycat funds bloat your investment portfolio and drag down performance. At some point, the blend will produce bland, index-like results at a high cost. Plus, heavier concentration in a few stocks adds risk. So how many funds do you need? No more than three in any asset class. How many in total depends on your asset allocation. Generally, it isn't 20 or 30; it's more like 10 or 12. A fund's performance doesn't always speak for itself. Funds are ranked, rated and rewarded on the strength of returns over several years. But if a manager is new, those results are no longer a litmus test. A burst of trading activity, venturing into new market sectors, adding larger-cap stocks, taking an aggressive stance in a volatile market -these are all telltale signs that a fund has changed its investment strategy, and not always for the better. |
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Nostradamus
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17-Sep-2006 23:56
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Hi prettylisa. I've not bought ETFs. But I'm thinking of it. Especially if there's greater variety. |
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teeth53
Supreme |
17-Sep-2006 17:19
Yells: "don't learn through life, learn to grow with life " |
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What about putting a side some $$$ in term insurance over 20 years ?? and up front don have to put up a lum sum of $$$, can cover urself as well and no need to worry whether ur $$$ is still around or not or making alot more then expected through fund mgt. Time is on ur side. |
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teeth53
Supreme |
17-Sep-2006 17:01
Yells: "don't learn through life, learn to grow with life " |
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Still what i don understand is why park the my $$$ in certain fund and i oso don know who and who is making $$$ for me or so call Fund mgr whom to trust, (myself or them) for themself with all the charges coming in..By the way some smaller funds will find their way to the grave, (unwanted baby) Ya..everbody said it long long term. Q??? is how long 5 years, 10 yrs, or 20 years ?? Can count me out. |
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prettylisa
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17-Sep-2006 15:29
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thank you Nostradamus! Can I ask if you bought ETFs? |
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Nostradamus
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17-Sep-2006 01:17
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ETFs have the same advantages as UTs, but they trade like stocks and have lower charges. You can read more in "Trading in ETFs". |
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Nostradamus
Supreme |
17-Sep-2006 01:14
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For UTs, they are only priced at the end of the day. You can't buy and sell on the same day because of that. So you can't catch intra-day low or high. Need to wait a few days. One advantage of UTs over stocks is the wider global coverage and sectors. UTs are a basket of stocks so they're already diversified, lowering risk. |
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prettylisa
Member |
29-Aug-2006 09:22
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Hi all, Thanks for your advice. I seem to hear that its better to invest on my own in FDs or dividend counters than buying a fund.... I will consider all your advice carefully. Looks like I got a lot to learn from all of you. Thank you all again! ~ lisa |
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klooloola
Member |
28-Aug-2006 11:47
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Funds in singapore are a bad investment expecially as the entry load can be a as high as 5%. Fundsupermarket is offering less than 2% for some of its funds so those may be worth looking at. I remain unconvinced that any fund you have here is outperforming its dividend reinvested undex over the last 5 years. if there is sucha fund that has done so please let me know. Rememebr i mena the dividend reinvested total index and not the index. it is simple to outperform the index if you reinvest the dividends on the index stocks. The reason i am negative on funds is tha tha you lose 5% of your money uprofnt an dthen the fund eats its 2%( expenses ) every year without having to return you anything. In my not very knowledgeable opinion if you want diversification just buy the streetracks STI ETF and keep reinvesting the dividends back. reinvesting dividends is vital. see http://www.sgx.com/psv/securities/etf/ETF_Straits_Times.shtml the etf has returned nearly 18% compared to the becnhmark 13.6, the extra return may be simply reinvested dividend. |
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ten4one
Master |
28-Aug-2006 05:33
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Most Funds are for the long term and managed by a group of so-called 'Fund Managers'. Win or lose, you'll still have to pay them yearly to manage your money. Good thing about Funds like unit trusts is they've the 'muscle' to spread your money globally in various sectors and thus spread your risks. Of course, the more the risks the higher the returns and vice versa. Go shop around and I'm sure you'll be able to find one that is tailored to your need. Funds are for people who either have no time or have no idea about the stock markets. I've learnt that it is best to learn how to move your own cheese or put your money into FDs and get miserable returns that can't even match the 'real' inflations. Cheers!!!!! |
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clauswu
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27-Aug-2006 20:24
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It depends on the timeframe, i.e. how long you want to "park" your money, and which fund or funds you have in mind. Buying a fund involves a hefty sales charge of between 2% - 5%. This is what you "lose" upfront, and the fund has to gain so much just for you to break even. This is unlikely to happen in a short period, hence if you want to "park" your money for less than 1 year funds, especially equity funds, are no good investment. If you have so called "money market funds" in mind that invest in short term bonds or similar investments you may get 2% - 3% annual return, usually with a lower upfront sales charge. Your net return could be 2% per annum. Personally I prefer to park money in a short term time deposit (some banks offer approx. 3% even for short duration and amounts below 50k), or on high-yield savings/cheque accounts that allow for daily liquidity. If you shop around you may get yields of up to 3% with daily availability. |
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prettylisa
Member |
27-Aug-2006 15:40
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Hi all, Thanks to all the gurus who answered my question on shorting last time. I took your advice and decided not to do it until I learn more. :) I got another question. For a newbie investor like me, is it better to park my money in funds? Some of my friends say its good but others tell me that most funds do not do well. Can I have your advise? |
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