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My wife and I are new to the financial planning world. We are interested in buying a mutual fund and keep finding in our research that a money manager with a good "long-term track record" is very important. Are we talking 5 or 10 (or more) years of good consistent money managing? Specifically, what constitutes a money manager with a good track record?
Hi there Grover, and welcome to MFO. I think that maybe you need to be more specific with your question. Are you talking about a paid personal money manager who will help you with your personal financial decisions (what funds to choose), or the manager of a well-run mutual fund?
If the latter, then I think that you'll need to be more specific yet, depending upon the type of mutual fund that you're interested in. Personally, I use American Funds for a variety of reasons, and their funds are run by various managerial teams, to deliberately minimize the "star manager" approach. I don't recommend American Funds though, because they charge a front "load" when you purchase, and there are plenty of other fund families out there who can do just as well for you without that load charge.
Because we have primarily used American funds, others on this board will be in a much better position to help you, based upon their very considerable experience.
Additionally, to get the feel of what constitutes good (or bad) fund management, I suggest that you at least skim through David Snowball's commentaries, available by pushing the "Commentary" button at the top of the page.
Agree with Old_Joe, you need to be a little more specific, and in any case this is a hard question to answer. In general, a good manager is one that helps you achieve your particular investment goals. But you need to know what those goals are in order to get any more specific.
In fact, when it comes to mutual funds, many people would argue that the manager is very *unimportant*, or to put it better, that you should avoid active fund management as much as possible, and instead you should go with a low-expense, broad index fund. I am not saying that is always the right approach, but it just goes to show the wide range of views on this subject.
I would suggest you first read a couple of books first, maybe something from the MFO recommended list: http://www.mutualfundobserver.com/resources/books/ I think "The Four Pillars of Investing" by Bernstein, "The Only Investment Guide You'll Ever Need" by Tobias, and "The Smartest Investment Book You'll Ever Read" by Solin should all be decent. After that you'll be able to better formulate your goals and you'll have a better idea of what you're looking for in a fund.
I think most people with the desire and time can absolutely make their own financial decisions.
In terms of mutual funds, it really depends on your age (as if you're 30, recommendations are going to be a lot different than if you're 60) and desired risk tolerance. There are thousands of mutual funds - while Fidelity and Vanguard have some very good ones, limiting to a couple of companies is well, quite limiting.
Comments
If the latter, then I think that you'll need to be more specific yet, depending upon the type of mutual fund that you're interested in. Personally, I use American Funds for a variety of reasons, and their funds are run by various managerial teams, to deliberately minimize the "star manager" approach. I don't recommend American Funds though, because they charge a front "load" when you purchase, and there are plenty of other fund families out there who can do just as well for you without that load charge.
Because we have primarily used American funds, others on this board will be in a much better position to help you, based upon their very considerable experience.
Additionally, to get the feel of what constitutes good (or bad) fund management, I suggest that you at least skim through David Snowball's commentaries, available by pushing the "Commentary" button at the top of the page.
In fact, when it comes to mutual funds, many people would argue that the manager is very *unimportant*, or to put it better, that you should avoid active fund management as much as possible, and instead you should go with a low-expense, broad index fund. I am not saying that is always the right approach, but it just goes to show the wide range of views on this subject.
I would suggest you first read a couple of books first, maybe something from the MFO recommended list: http://www.mutualfundobserver.com/resources/books/
I think "The Four Pillars of Investing" by Bernstein, "The Only Investment Guide You'll Ever Need" by Tobias, and "The Smartest Investment Book You'll Ever Read" by Solin should all be decent. After that you'll be able to better formulate your goals and you'll have a better idea of what you're looking for in a fund.
Should we pay someone to help us decide which mutual funds to choose or is this something we can safely do on our own as beginners?
And who should we have help us or what mutual funds would you all recommend? We've heard Vanguard and Fidelity do a good job. What do you all think?
FYI, we are looking for slow and steady growth, nothing too risky. Thanks for your help.
I think most people with the desire and time can absolutely make their own financial decisions.
In terms of mutual funds, it really depends on your age (as if you're 30, recommendations are going to be a lot different than if you're 60) and desired risk tolerance. There are thousands of mutual funds - while Fidelity and Vanguard have some very good ones, limiting to a couple of companies is well, quite limiting.