Investing Money in the Best Funds For 2011 ;Investing money in funds is the best way to go for about 98% of the people for 2011 and beyond. But you might be missing the boat by not investing money in the best funds. There are traditional funds and a newer breed on the investing scene that could be the best type of funds for you. Here are your choices.
All funds offer simplified investing for average folks who don't want to get involved with everyday money management and investing decisions like picking stocks and bonds for their portfolio. That's what fund companies do in the form of bond, stock, and money market funds. Before you beat your head against the wall in search of the best funds for 2011 in the three asset categories mentioned in the last sentence, take a step back. There are two popular versions to consider.
Mutual funds are the traditional version and have been the average investor's top choice for investing money in stocks and bonds since I started in the money business in 1972. To this day I believe they are the best funds for 2011 and into the future for most people. And I also believe that the best mutual funds in the stock and bond categories are the index funds which simply track an index. These are not actively managed in an attempt to beat their benchmark index... these funds simply track the index to duplicate its performance. Advantage: low cost of investing for you and no downside surprises in the performance department.
Hold that last thought, because there is at least one disadvantage to even the best mutual funds, even of the index variety. Investing money, moving money around, and liquidating shares all involve a time lag with mutual funds. For example, if the market is crashing and you want out NOW, an order to sell your stock funds won't typically take effect until the close of the market at 4:00 P.M. Eastern Time. In other words, you don't have INSTANT liquidity when you need it. This is no big deal for most people investing money in funds. They are long term investors and rarely make changes in a hurry.
If you would like added flexibility and instant liquidity when investing money in funds in 2011 and beyond consider adding the newer breed to your portfolio: EXCHANGE-TRADED funds (ETFs). These are typically INDEX FUNDS that trade on the major exchanges just like other popular stocks do. Investing money here is best done with a brokerage account at a major discount broker. You simply open an account and deposit money - then you're ready to buy or sell these fund shares in a split second at a cost of about $10 a transaction.
ETFs trade like stocks but come in many varieties including stock index and bond index funds. Also available are specialty funds that invest in the likes of gold, silver and real estate. For example, if you are thinking of investing money in gold in 2011 you might want to consider an ETF that invests in gold. The advantage: the price of gold can move up or down quickly and you might want to move quickly if it starts to dive.
Now you know that when investing money in funds in 2011 and beyond you have two basic flavors to choose from. The best funds for most of the people most of the time are still mutual funds. For those of you who are more adventuresome the best funds to add to your portfolio are exchange traded funds.
A retired financial planner, James Leitz has an MBA (finance) and 35 years of investing experience. For 20 years he advised individual investors, working directly with them helping them to reach their financial goals.
Jim is the author of a complete investor guide, Invest Informed, designed for average investors or would-be investors of all levels of financial background and experience. To learn more about investments and investing and his new financial guide go to
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