Mutual Funds

flaguy · 10-20-2008, 04:26 PM

Well, I don't understand how they work. I mean, how do they make money? To me it seems like you buy into a mutual fund...let's say it is $10 per share. Now let's say 10 years later it is worth $15 per share. Haven't you not made any money until you actually sell it?

I'm 26 and want to start investing but I don't even know where to begin. I plan on starting a Roth IRA investing in some type of mutual fund.

Any knowledge you can pass on is appreciated.

Sizzox · 10-20-2008, 04:31 PM

I dont really know that much about mutal funds either as a young kid when i was like 13 i bought into one i put in 2000 bucks all the money i had made working at my uncles golf cource and that was right before 9/11 and i lost like 500 bucks wasnt to bad but for me then that was my hard earned cash that took me a year to make 500 haha.

But now im getting intrested in investing again in stocks and or a mutral fund and am also willing to learn about it so pleace enlighten us.

camaro5 · 10-20-2008, 06:11 PM

My friend,

Consumer Reports has great info on this. Personally, I trust Fidelity Investments. They have funds that have made money for many years. They have graphs of past performance, and you simply pick the best one(s). Just take a look at all the info on their website. Best advice, when stuff hits the fan like right now, DON'T sell. The market will be back, always has.

diddiyo · 10-20-2008, 06:19 PM

Quote:

Originally Posted by flaguy

I'm 26 and want to start investing but I don't even know where to begin.

www.fool.com - 13 Steps to Investing

I'm also learning

Fast1 · 10-20-2008, 06:29 PM

I like the Roth IRAs because you put after tax dollars into it and the principal and interest are tax free for life. I have to think the tax rates are going to be much higher 20-30 years from now than they are today.

*TAG UR IT* · 10-21-2008, 03:16 AM

Quote:

Originally Posted by camaro5

My friend,

Consumer Reports has great info on this. Personally, I trust Fidelity Investments. They have funds that have made money for many years. They have graphs of past performance, and you simply pick the best one(s). Just take a look at all the info on their website. Best advice, when stuff hits the fan like right now, DON'T sell. The market will be back, always has.

That's what my dad goes with...and got my brother in.

headpunter · 10-21-2008, 05:04 AM

the best way i can think to describe a mutual fund is it is a stock you can buy. buying this stock is like putting money in the pot of the mutual fund and it gives you portions of many different stocks. its kinda like buying alot of smaller portions of stocks.

so like in one of the mutual funds i recently divested from, The manager had bought GM, WalMart, Home Depot, Best Buy, and many other companies. so my one stock in the Mutual fund was worth a small portion of a stock in each of those companies.

flaguy · 10-21-2008, 09:20 AM

Quote:

Originally Posted by headpunter

the best way i can think to describe a mutual fund is it is a stock you can buy. buying this stock is like putting money in the pot of the mutual fund and it gives you portions of many different stocks. its kinda like buying alot of smaller portions of stocks.

so like in one of the mutual funds i recently divested from, The manager had bought GM, WalMart, Home Depot, Best Buy, and many other companies. so my one stock in the Mutual fund was worth a small portion of a stock in each of those companies.

Yeah, I understand that part of it. I guess what I don't understand is how they make money by doing that. Are they constantly buying and selling many stocks making profit and you receive the dividends....or.....when you buy into a mutual fund you bought into all of those companies and those shares just sit around until you decide to sell....then you receive your profit. I guess that is what confuses me.

Is that confusing?

headpunter · 10-21-2008, 10:34 AM

Quote:

Originally Posted by flaguy

Yeah, I understand that part of it. I guess what I don't understand is how they make money by doing that. Are they constantly buying and selling many stocks making profit and you receive the dividends....or.....when you buy into a mutual fund you bought into all of those companies and those shares just sit around until you decide to sell....then you receive your profit. I guess that is what confuses me.

Is that confusing?

like with any stock the more value the stock has the more net worth that owners of that stock have. also the fund manager makes some money on selling and trades to support himself/herself.

*DGthe3* · 10-21-2008, 11:13 AM

Like any other investment, you lose your money the instant you hand it over, and you hope to eventually get more money back than you forked over in the first place. The timing doesn't always work out, but in the long run it will almost always make money.

Mutual funds are a collection of high value stocks and other investments. All told it would be hundreds or thousands of dollars to buy each individual investment in the mutual fund. So you and a bunch of others all buy into it and share the cost and profit. They return on investment, including annuities and such, is dependant on the type of fund in general, as well as the items in each individual mutual fund.

diddiyo · 10-24-2008, 10:21 AM

10/24, 10.20am

GM 5.55 -0.55 (-9.02%)
F 1.93 -0.07 (-3.50%)
BMW 17.50 -2.58 (-12.85%)

woops. opec cuts oil output too.

10-20-2008, 04:26 PM	#1
flaguy Drives: 2014 2SS RS Spring Edition Join Date: Mar 2008 Location: Ga Posts: 230	Mutual Funds Well, I don't understand how they work. I mean, how do they make money? To me it seems like you buy into a mutual fund...let's say it is $10 per share. Now let's say 10 years later it is worth $15 per share. Haven't you not made any money until you actually sell it? I'm 26 and want to start investing but I don't even know where to begin. I plan on starting a Roth IRA investing in some type of mutual fund. Any knowledge you can pass on is appreciated.

10-20-2008, 06:11 PM	#3
camaro5 Drives: X-15 Velocipede Join Date: Mar 2008 Location: SW Florida Posts: 4,630	My friend, Consumer Reports has great info on this. Personally, I trust Fidelity Investments. They have funds that have made money for many years. They have graphs of past performance, and you simply pick the best one(s). Just take a look at all the info on their website. Best advice, when stuff hits the fan like right now, DON'T sell. The market will be back, always has. Last edited by camaro5; 10-20-2008 at 07:28 PM. Reason: spelling

10-21-2008, 05:04 AM	#7
headpunter Not That sad..considering Drives: Man Join Date: Aug 2007 Location: the part of washington the capital forgot about. Posts: 3,745 View My Garage	the best way i can think to describe a mutual fund is it is a stock you can buy. buying this stock is like putting money in the pot of the mutual fund and it gives you portions of many different stocks. its kinda like buying alot of smaller portions of stocks. so like in one of the mutual funds i recently divested from, The manager had bought GM, WalMart, Home Depot, Best Buy, and many other companies. so my one stock in the Mutual fund was worth a small portion of a stock in each of those companies. __________________ Stop Whinging

10-21-2008, 11:13 AM	#10
DGthe3 Moderator.ca Drives: 05 Grand Am GT Join Date: Jul 2007 Location: Niagara, Canada Posts: 25,366	Like any other investment, you lose your money the instant you hand it over, and you hope to eventually get more money back than you forked over in the first place. The timing doesn't always work out, but in the long run it will almost always make money. Mutual funds are a collection of high value stocks and other investments. All told it would be hundreds or thousands of dollars to buy each individual investment in the mutual fund. So you and a bunch of others all buy into it and share the cost and profit. They return on investment, including annuities and such, is dependant on the type of fund in general, as well as the items in each individual mutual fund. __________________ Note, if I've gotten any facts wrong in the above, just ignore any points I made with them __________________ Originally Posted by FbodFather My sister's dentist's brother's cousin's housekeeper's dog-breeder's nephew sells coffee filters to the company that provides coffee to General Motors...... ........and HE WOULD KNOW!!!! __________________ Camaro Fest sub-forum

10-20-2008, 04:31 PM	#2
Sizzox Most Known Unknown Drives: 08 Vette Join Date: Jul 2008 Location: Salem, Ohio Posts: 778 View My Garage	I dont really know that much about mutal funds either as a young kid when i was like 13 i bought into one i put in 2000 bucks all the money i had made working at my uncles golf cource and that was right before 9/11 and i lost like 500 bucks wasnt to bad but for me then that was my hard earned cash that took me a year to make 500 haha. But now im getting intrested in investing again in stocks and or a mutral fund and am also willing to learn about it so pleace enlighten us.

10-20-2008, 06:29 PM	#5
Fast1 Drives: 2010 Summit White SS Join Date: Oct 2008 Location: Salt Lake City Posts: 167	I like the Roth IRAs because you put after tax dollars into it and the principal and interest are tax free for life. I have to think the tax rates are going to be much higher 20-30 years from now than they are today.

10-24-2008, 10:21 AM	#11
diddiyo Drives: . Join Date: Jun 2008 Location: . Posts: 3,048	10/24, 10.20am GM 5.55 -0.55 (-9.02%) F 1.93 -0.07 (-3.50%) BMW 17.50 -2.58 (-12.85%) woops. opec cuts oil output too.