Mutual Fund Advice

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same boat here - I am continuing my fund contributions on a fortnightly basis to make good of the low unit prices... you get a string of real bargains while everything's down.

Mine's lost about 25% now since january but what are you going to do - selling would only crystallize your losses. until you sold it is onl'y on paper so to speak.

if you build up cheap units now it will serve you well infuture.
 
Originally Posted By: twentynine
This is an oil forum. While I believe we got some really smart people here it might not be the best place for finacial advise. Me I can't even spell financiel.


To the contrary, I'd trust the people here over a financial adviser any day of the week!
 
Guy I work with took all his 401K out of stock funds and put in a guarenteed return fund back last Sept. That guy is grinning ear to ear right now. He is getting about 2-3% and has zero loss. Me, I am sitting on about 50K losses at this point, but remember, it's only a loss if you cash out. I don't need the money for at least 10 years, so my best plan is to ignore the market, except to pump any extra money I can in a bit at a time for the next 6 to 18 months, which may be the time frame for this to work out and things to actually start going back up.
 
So it depends on what kind of chart you are looking at. If you are looking at how a 10K investment at the beginning of the period has done at the end, capital gains distributions likely won't appear as drops since the value of your investment hasn't dropped, just the NAV of a share. (Since with the distribution, you are getting it in more shares in most (all?) cases.

But if you are only looking at NAV, it can drop due to such a distribution, even though the value of your position has not dropped, since you got more shares as part of that distribution.

You make a good point. I have to be careful to look at performance, not just NAV over time.

With that said, I wouldn't take my money out of that fund right now. I wouldn't have ALL of my money in it either, but I wouldn't bail on it.
 
Pretty much the only valid way to compare traditional mutual fund performance is through average annual returns and the value of a $10,000 chart - the latter really picks up on funds that invest in dividend paying stocks and funds that produce a lot of realized capital gains.
 
Originally Posted By: javacontour
So it depends on what kind of chart you are looking at. If you are looking at how a 10K investment at the beginning of the period has done at the end, capital gains distributions likely won't appear as drops since the value of your investment hasn't dropped, just the NAV of a share. (Since with the distribution, you are getting it in more shares in most (all?) cases.



A mutual fund distribution is not more shares - it is simply the capital gains and dividends earned in the fund. If a person didn't reinvest the money, you'd simply just get a check in the mail from the fund. If you reinvest that money, all you are doing at that point is buying more shares in the fund at the current NAV/share.

Gets pretty complicated! The tax implications in distributions for mutual funds not in an IRA can make you go mad as then you have to separate out short and long term capital gains, preferred dividends from regular dividends etc. etc. etc (since those are all taxed at different rates)! If the fund invest in municipal bonds - oh lord, you can spend hours trying to figure that out...
 
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We backed the 401k into more of a balanced cash portfolio in January 2008. Need to preserve the gains. We were ridiculed for the cash move in January since the gains were still being viewed in the accounts. As a matter of fact, the financial adviser had wanted to ask us why we would make such a move, and wanted us to call back. We ignored his request.

Since you have asked what to do, understand the majority of the move has probably already occurred. We believe the best thing to do at this point is make a note to self not to repeat the same mistake in the future. Regardless, most people will take advice given with a grain of sand.
 
yeah, if you get a check then things are more complex.

Everything I have is in either a 401(k) or an IRA, so it all gets reinvested.

But I have owned stock outside of such an account, and my wife owns some right now. So I'll be figuring that stuff out again.

Her dad is a retired broker, so hopefully he has some good basis information :)
 
This is the worst possible time to sell out your holdings. It's time to average into this market. When we rebound, which we WILL, you'll profit handsomely. It's happened every time, what makes you think this time is different?
 
Besides, if it gets bad enough that the market goes to zero, I expect any dollars I have to be worthless anyway.

The only smart play is to stay in the market.
 
IMO people who are retiring soon (within 5 years) should not put any more money in the fund or stock market at the moment, they can't handle the downside risk.

For those who are not cashing out, right now probably stay the course. Do not sell as it is too cheap and the loss would be huge, but don't buy yet as it is too expensive still and can go down further.

My 401k is in cash fund since 2006, may go in when all the dust settled. Too bad they don't have a gold fund or else I would have buy that.
 
Originally Posted By: javacontour
Besides, if it gets bad enough that the market goes to zero, I expect any dollars I have to be worthless anyway.

The only smart play is to stay in the market.


Excellent point.
 
To the OP. A lot of good advise here, being in my 50's this down turn is really frightening. I haven't been looking too much at my portfolio as it sickens me. I'm hanging on, and when I think the smoke has cleared a little, I might start dollar cost averaging in again. I think at this point selling would be a mistake. I also think there is a lot more downside to this, so sit tight and wait a little longer before jumping back in.


Frank D
 
Originally Posted By: javacontour
For most folks, it's impossible to time the market. So if you are in the kind of funds you want to be in, keep investing.

Dollar cost averaging is your friend.

I'm still looking at 25+ years to retirement, so I'm pretty aggressive.

As I get closer, I'll want to lock in yields and move money to "safer" investments.

I don't try to beat the market. Most of my money is in index funds as most fund managers don't beat the market consistently. So why not just invest in the market as a whole.

I think I have about 1/3rd right now in overseas funds, and maybe 5% in precious metals. That 5% in precious metals yesterday cut my losses in 1/2 on the other 95% of my funds.

That's about my only "gamble" is that small amount in a metals fund.

If the fund you are in is the one you want to be in for your goals, then stick with it.

I just look at it as they are on sale, and my 401(k) contributions this month will buy more shares.


This is some great advice. Over time, dollar cost averaging is your best friend.
 
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Originally Posted By: Gary Allan
Buy and collect scrap metal. It's "real".
Hey that reminds me. My mouth just increased in value over the past months if I consider the several gold crowns.
banana2.gif
 
Originally Posted By: TallPaul
Originally Posted By: Gary Allan
Buy and collect scrap metal. It's "real".
Hey that reminds me. My mouth just increased in value over the past months if I consider the several gold crowns.
banana2.gif



I paid $585 for my gold fused porcelain bridge in 1975. I figure that it must be worth more than I am at this point.
 
Yeah, I paid $600 each for gold caps on three teeth this year. Dentist just told me they are not surcharging per weight, so that probably will be more next time. Also normal fee is around $920, but I don't have insurance coverage so I get a break. A bridge would have a lot more gold. I bet the bridge would be $2000 today.

Before you die, tell the kids to salvage the gold from your mouth before they plant you.
 
Originally Posted By: TallPaul


Before you die, tell the kids to salvage the gold from your mouth before they plant you.



I bet the funeral home will get their hands on it before one's kids can.
 
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