| The best bond funds and best stock funds have | | | | and profits, and investors could find themselves |
| something in common. Looking forward, you are | | | | on another downhill sled ride. Last year's best |
| probably not familiar with some of the best bond | | | | stock funds can fall as fast as they went up in |
| funds; and the best stock funds are getting more | | | | value. When it's hard to pinpoint your target, a |
| difficult to find. This article might help you out. | | | | shotgun approach might be more appropriate. |
| The best bond funds for most of the people, | | | | Own a core or primary equity holding, like an |
| most of the time are intermediate-term funds | | | | S&P 500 Index fund. Then consider branching |
| that hold debt securities (bonds) maturing in 5 to | | | | out by adding the following. |
| 10 years on average. Every bond fund will state in | | | | Find a quality VALUE FUND that pays higher than |
| its literature the average maturity for the debt | | | | average dividends. If the market declines, at least |
| securities held. Intermediate-term funds have | | | | you'll earn higher dividends. Add a diversified |
| been good investments for years with a nice | | | | INTERNATIONAL EQUITY fund in case foreign |
| blend of return vs. risk. They are popular and you | | | | equities perform better than domestic ones. Then |
| might own one. | | | | consider specialty (non-diversified) sectors like |
| Things could change in the foreseeable future as | | | | NATURAL RESOURCES, ENERGY, BASIC |
| the government deals with new threats of higher | | | | MATERIALS, PRECIOUS METALS (gold & |
| inflation and higher interest rates (the dynamic | | | | silver) and REAL ESTATE funds. As a group, |
| duo). Debt securities will be affected significantly if | | | | these can be good investments when inflation and |
| the duo ignite and drive higher. Most bond funds | | | | or interest rates rear their ugly heads. |
| and their investors will go along for the ride, down | | | | Limit your risks in bond funds and increase your |
| a slippery slope. The hardest hit and biggest losses | | | | expose to a variety of stock funds as the future |
| will be in long-term bond funds with average | | | | unfolds. Regardless of the specific investment |
| maturities of 20 to 30 years. Intermediate-term | | | | decisions you make, the best bond funds and |
| bond funds will take smaller losses. | | | | best stock funds do have one thing in common: |
| Suggestions for the best bond funds: Avoid | | | | lower than average costs and expenses. High |
| long-term funds, and keep some money in the | | | | overhead directly eats away at your investment |
| intermediate-term varieties. Then, consider some | | | | returns. The two largest mutual fund companies in |
| you might not be presently familiar with. | | | | America offer funds with NO sales charges, and |
| SHORT-TERM bond funds have average | | | | lower than average yearly expenses: Vanguard |
| maturities of less than 5 years. If inflation and | | | | and Fidelity. |
| interest rates head north, you have much less | | | | You can pay more than 5% to invest with yearly |
| risk here. INFLATION-PROTECTED bond funds | | | | expenses of more than 2% a year. Or, you can |
| that hold debt securities issued by the | | | | pay nothing to invest (no-load), and less than |
| government that are adjusted (principal and | | | | ½% a year for expenses. It's your choice; |
| interest) for changes in inflation could be good | | | | and the good news is that you will not need to |
| investments as well. | | | | sacrifice quality. The two mutual fund companies |
| Our dynamic duo is no friend of the domestic | | | | above did not become the biggest by offering |
| equities market or stock funds, either. Rising | | | | poor product or service. They got to the top by |
| inflation and interest rates hurt corporate sales | | | | offering value to customers like you and me. |