| The best mutual funds for 2010 and the best | | | | the future: avoid long term bonds and bond funds |
| investment strategy for 2010 and beyond may | | | | with average maturities of 10 years or more |
| not be the same mutual funds or investment | | | | (that invest in longer term bonds). Interest rate |
| strategy that worked in 2009. Here are some | | | | risk is high, which simply means that when |
| adjustments to consider in mutual funds and | | | | interest rates go up these bonds and funds will fall |
| investment strategy going forward. | | | | significantly in price (value). Bond funds with |
| In considering in the best mutual funds to invest in | | | | average maturities closer to 5 years will pay a |
| and the best investment strategy for 2010 and | | | | reasonably attractive income with a whole lot less |
| beyond remember this: what shook the nation | | | | interest rate risk. |
| and the investment world in 2008 was not just | | | | BEST MUTUAL FUNDS, MONEY MARKET |
| another recession. It was a financial crisis. The | | | | CATEGORY... Money markets and the funds that |
| economy improved and stock prices went up in | | | | invest there are paying next to nothing, but at |
| 2009 through early 2010, but are our troubles | | | | least these are among the safest investments in |
| behind us? | | | | the world. The best investment strategy for 2010 |
| BEST MUTUAL FUNDS, STOCK CATEGORY... Be | | | | is NOT TO AVOID these funds. This interest rate |
| less concerned with the best mutual funds here | | | | situation is highly unusual and can not continue |
| and more concerned with how much money you | | | | indefinitely. Our government has purposely moved |
| have allocated to stocks in general. Your best | | | | to keep money market (short-term) rates low to |
| investment strategy for 2010 and going forward: | | | | stimulate growth in the economy. The problem is |
| lighten up; don't load up on stock funds. Don't | | | | that with these rates near zero, what do they do |
| chase a market that has gone up 70% in little | | | | to stimulate the economy the next time we see |
| over a year. The large institutional investors have | | | | recession or worse? What happens when the rest |
| bid prices up, for at least two basic reasons. First, | | | | of the world is no longer eager to buy our |
| stock prices had fallen almost 60% by early | | | | Treasury securities at historically low interest |
| March of 2009 and were over-sold (cheap). | | | | yields to finance our debt? Interest rates will go |
| Second, big money managers had few other | | | | up, and so will money market fund yields. |
| attractive alternatives with low interest rates | | | | The best mutual funds for 2010 in the money |
| making both bonds and money market securities | | | | market category could be the tax-free versions, |
| less than attractive. Hence, the best investment | | | | especially for those in higher tax brackets. Some |
| strategy they could come up with for most of | | | | of them are actually paying more than their |
| their money was to wade into the stock market. | | | | taxable counterparts. Money market funds pay |
| Stay away from the more volatile and riskier | | | | interest in the form of dividends, do not fluctuate |
| stock funds that invest either domestically or | | | | in value, and are by far the safest of all fund |
| abroad. Debt problems are in the spotlight in | | | | categories. These funds do not have sales |
| several areas of Europe, and there is fear that | | | | charges, but investors do pay for yearly |
| this contagion could spread. Emphasize high-quality | | | | expenses. Check and compare the expense ratios |
| stock funds of the large-cap equity-income | | | | and yields before deciding on a money market |
| variety that pay a respectable dividend in your | | | | fund. |
| portfolio. In the international stock fund area, go | | | | BEST MUTUAL FUNDS, STOCK and BOND |
| with high quality as well. One exception to avoiding | | | | CATEGORIES... There is one best investment |
| volatility is that you may want to include some | | | | strategy for 2010 and beyond that can only work |
| specialty stock funds, or those that invest | | | | for you as an investor, and never fails to increase |
| contrary to the norm in your portfolio: like gold, | | | | your profits and returns in mutual fund investing. |
| real estate, natural resources funds or funds with | | | | The best mutual funds keep the cost of investing |
| a "contra" approach to investing. This will give you | | | | low. No-load funds have no sales charges and |
| added diversification. | | | | some of them have lower than average yearly |
| BEST MUTUAL FUNDS, BOND CATEGORY... The | | | | expenses. Sales charges, expenses and fees |
| average investor in recent times has bought into | | | | come out of your pocket and only work against |
| bond funds in search of higher income and more | | | | you. The very lowest cost of investing can be |
| safety than stock funds offer. Few seem to | | | | found in no-load index funds of both the stock |
| realize that this can be a risky proposition in | | | | and bond variety. Lower your cost of investing as |
| today's economy and interest rate environment. | | | | part of your overall investment strategy. |
| The best investment strategy for 2010 and into | | | | |