| The top mutual funds for clueless investors are | | | | control. She made one decision, and being |
| mutual funds that make investing easier. Picking | | | | somewhat clueless is relieved. Does this mean |
| mutual funds can be intimidating to the uninitiated. | | | | that she will not lose a significant amount of |
| If in doubt give the following funds a try. Here are | | | | money in the future? Absolutely not. In the first |
| a few pointers for those who need help with their | | | | few years 80% or more of her money will likely |
| 401k, IRA or other investment account where | | | | be invested in stocks in the form of stock funds. |
| mutual funds are your investment options. | | | | Even 20 years later most of her retirement nest |
| Mutual funds are simply investment packages that | | | | egg can be at risk in stocks. What happened in |
| manage securities like stocks and bonds for you. | | | | 2008 to investors in a target fund 2020, 2030, or |
| You pick the fund and they do the management | | | | 2040 or more? They took big losses as the stock |
| unusually at a reasonable cost. If you have a 401k | | | | market dived. The higher the target number, the |
| at work, for example, your investment options | | | | greater your exposure to stocks; and the greater |
| are likely mutual funds: stock funds and bond | | | | your market risk and potential losses. |
| funds primarily. | | | | Even with the great stock market rally that |
| If your investment options confuse you take the | | | | started early in 2009, many target fund investors |
| easy way out: balanced funds, often in the form | | | | were still under water after a 60% rise in stock |
| of TARGET funds or target retirement funds. | | | | prices. The only good news is that left to their |
| These have become the top mutual funds | | | | own devices (doing their own asset allocation) |
| recommended in retirement plans. The reason is | | | | many people would be even worse off; both now |
| simple. Few people know how to invest, and this | | | | and in retirement. Here are the pointers I |
| leads to bad investment decisions. Nobody, | | | | promised to help you make your money grow |
| including your employer, wants to be blamed if | | | | while avoiding large losses. |
| you lose a big chunk of money. Target funds | | | | Don't put all of your money into a target fund. Put |
| make all of the investment decisions for you. | | | | ¼ to ½ of it into the safest |
| Now you don't need to concern yourself with | | | | investment options available: a money market |
| asset allocation - where to put your money in | | | | fund and/or a stable account if available. Second, |
| what proportion. Target funds do it all for you, | | | | go with safer target funds. For example, Torie is |
| becoming more conservative as you get older. | | | | my daughter and doesn't want much risk. Early in |
| Your job is to simply pick the target fund that | | | | 2007 we worked together and set her 401k up |
| most closely approximates the year you think | | | | as follows: ½ in the safe stable account and |
| you might retire. Your investment options will | | | | ½ in target fund 2020 vs. 100% in target |
| likely have a list of them. | | | | 2040. This allocation was for BOTH her money |
| For example, Torie hopes to retire by 2040. She | | | | that was already in her account, and for her |
| scans the list of investment options available to | | | | future contributions. |
| her and selects target fund 2040. Did I tell you it | | | | In late 2009 she called from Boston to tell me |
| was simple? By moving all of her 401k money | | | | that she never had a significant loss and was |
| and future contributions to this target fund she will | | | | making money in her 401k. Target funds are the |
| have it all professionally managed for her. The risk | | | | top mutual funds for most people who frankly do |
| will automatically be adjusted for her over time | | | | not know how to invest and admit it. This includes |
| based on how far away retirement is. As | | | | most people, though some don't admit it. But |
| retirement nears risk is reduced and safety is | | | | contrary to popular opinion in the investment |
| increased so she can relax. The fund takes care | | | | industry, I suggest you do not trust all of your |
| of the asset allocation decisions. | | | | investment assets to them. They are riskier than |
| Target funds just became the top mutual funds in | | | | most people want to be with ALL of their |
| her hit parade because her money is on cruise | | | | retirement nest egg. |