Mutual Funds

[abcdavid01]

My dad wants to start investing more and tasked me with researching mutual funds. Does anyone have any suggestions?

I know about this one, The Permanent Portfolio based on Harry Browne's investment strategies:

http://www.permanentportfolio.com/pd_perf.htm

It's beating all of the funds he's currently investing in as far as 5 and 10 year returns.

[zboy1]

My dad wants to start investing more and tasked me with researching mutual funds. Does anyone have any suggestions?

I know about this one, The Permanent Portfolio based on Harry Browne's investment strategies:

http://www.permanentportfolio.com/pd_perf.htm

It's beating all of the funds he's currently investing in as far as 5 and 10 year returns.

Permanent Portfolio is a great mutual fund! I had to redeem all my investment in the fund a couple of years ago to pay back some of my student loans I had accrued. Even during the peak of the financial collapse, the fund held firm and lost only a tiny amount in comparison to other funds that I had. It bounced back nicely after that too! I highly recommend it.

Another fund I'd recommend is an ETF--TBT (ProShares UltraShort 20+ Year Treasury). It's highly speculative, so I would only invest if you have some spare change lying around. If you believe there is a bond bubble about to burst and just around the corner--as I do, I would use this ETF to short the Treasury market. Not for the weak stomach though!

[abcdavid01]

Yeah, my dad also told me to look at bonds as sort of a secondary thing, but he also said he didn't want to invest in individual stocks. He's just looking for something steady, so I don't think he'd want to play chicken with a bubble.

[momopi]

My dad wants to start investing more and tasked me with researching mutual funds. Does anyone have any suggestions?
I know about this one, The Permanent Portfolio based on Harry Browne's investment strategies:
http://www.permanentportfolio.com/pd_perf.htm
It's beating all of the funds he's currently investing in as far as 5 and 10 year returns.

http://www.bogleheads.org/
http://www.bogleheads.org/forum/index.php

[fschmidt]

I would have thought mutual funds were for chumps now that the market is so heavily rigged.

I agree. I am moving my money from mutual funds to rental properties. Only physical assets are safe, including real estate, farmland, and precious metals.

[abcdavid01]

Well yeah, I figured as well. The Permanent Portfolio is at least 25% metals though. What should I tell my dad? I sent him some stuff about farmland in Chile before too. See, he's a smart guy, successful lawyer and all, but he works a lot. He doesn't have time for stuff like this, so he asks me to research for him and he wants to have long term investments instead of constant trading. He got blindsided by the dot com bubble and the housing bubble. He lost a couple thousand on Facebook. What should I tell him?

[fschmidt]

Metals don't count unless you have physical possession. Otherwise all you have is a piece of paper promising the metal.

My strategy is to buy houses through my real estate agent who is also my property manager. First we sat down and agreed on a spreadsheet for valuing houses. Then I told him that I will buy houses giving at least a 5% return. I don't even bother to see the houses before my offer is accepted because I can always walk away for a small price later. Interestingly, my main competitors in buying house are the big banks who are now investing in this area, and I live in out-of-the-way El Paso.

[abcdavid01]

Yeah, that's why Germany repatriated theirs...

It's really scary times we live in.

Actually if it really goes to hell and there's martial law, nothing is safe. Government can take any land it wants. I have an upper middle class family because my parents are smart and hard workers who save, but they don't invest very well. The real best answer is offshore holdings, including farmland in Chile. And, uh, gold stockpiled on the farm somewhere maybe.

Okay, how about this. My dad says he wants to invest $25K. I don't know what his current holdings are, but I can check tomorrow. Apparently my mother has a large retirement fund because she was a Verizon exec. Apparently the stock went down from like 80 a share to 25 in '08, but what can you do? She refuses to touch it though. I also think she has a large inheritance from my grandpa, who died six years ago. My dad keeps pestering her to invest it, but he tells me she's just sitting on it. It isn't money to her but the last holding of her dead father.

But my dad said he had 25k to invest. That's what I have to work with. What's the best plan?

[Rock]

My dad wants to start investing more and tasked me with researching mutual funds. Does anyone have any suggestions?

I know about this one, The Permanent Portfolio based on Harry Browne's investment strategies:

http://www.permanentportfolio.com/pd_perf.htm

It's beating all of the funds he's currently investing in as far as 5 and 10 year returns.

Some ideas:

1. One product I get through a broker in Taiwan offers steady monthly income of about 0.8% per month (9.6% per year) with just a 6 month contract which roles over automatically if you don't redeem. If you cancel contract in the middle, you only loose the interest (principal is returned). It has a 16 year track record with no defaults or missed payments. But in the early years, the interest rate was much higher (high teens) and it has come down steadily as it's investor base has expanded. I consider it moderate to moderate high risk.

2. Have you dad send you to Pattaya and Manila to search out rental properties. Sometimes, you can find deals which would generate net yields of 7-9%. It also give you a bit of diversification out of US$ and developed world currencies (Thai Baht or Philippine Peso) plus an inflation hedge. You can get a local company to manage the the condo for you. In Phils, you can get a mortgage (local currency or US$ at around 6% too).

3. Open an account at some sort of currency broker like Saxo. That will allow you to diversify currency exposure buy buying a portfolio of developed and developing world currencies plus gold and silver with just a tiny bit of capital (high leverage is the norm for such accounts).

4. Perhaps consider lending clubs. Momopi can provide you with the websites to the biggest ones. These should generate great returns until a market wide crises similar to 2008 hits. Then your returns will go deep into the red. But at least you should still get bulk of your capital back cus they are well diversified and durations of individual loans vary a lot.

5. Always factor in inflation and not just CPI/WPI. Real costs of certain things like tuition, medical, and HA lifestyle in some of our favorite countries have gone up to the tune of 7-15% per annum in US$ terms over the last decade or so. So even if you are generating 8% in a purely financial investment (say a bond), you are really just staying above water, not generating a real return. The good thing about real estate, farmland, and other real assets is that they hedge against this to a certain degree. However, stay away from most US farmland now. It's already in bubble territory. Not to say it won't go up anymore. But it's very risky cus u never know when that bubble is gonna burst.

6. IMO, market timing is a suckers game. But if you wanna invest in stocks, do it the Buffet way. Find companies you like and understand, value them, then jump if their prices ever fall into deep value territory. A crisis which creates widespread panic creates wonderful buying opportunities cus people tend to panic sell across the board. Think Asian markets during SARS, emerging market currencies or high yield bonds during 2009 crash. After 911, markets suffered a brief decline which affected all companies, even underwear retailers. Do u imagine people stopped buying underwear because of 911. Markets get very emotional sometimes. That's when cool and rational heads can get great long term deals, both on the long side and the short side.

[zboy1]

How about starting an account with James Turk and his GoldMoney Precious Metals Holding Company:

http://www.goldmoney.com/

At GoldMoney we make it very easy for you to conveniently buy, own and store precious metals. The first step is to sign up for free to open a Holding, which is a personal record of your activity in GoldMoney and the metal you own. After a short verification process, you can transfer money to fund your Holding and start buying metals to preserve your purchasing power.

With GoldMoney you hold and own allocated metal in your name, in contrast with ETFs, certificates and other forms of paper gold. We always maintain a one-to-one ratio of physical metals in the vaults to metals that are recorded on our customers' Holdings.

[youtube]http://www.youtube.com/watch?feature=pl ... aX8oW_8fiw[/youtube]

[Contrarian Expatriate]

This is a bad time to start investing in the market due to the recent run-up. However, after a correction or a crash, you should begin.

Mutual funds are only worth it if you employ the Index Fund strategy. I personally suggest a 3rd in an S&P 500 fund, a 3rd in a Wilshire 4500 (AKA Extended Market) fund, and a third in a Morgan Stanley Euro-Australasian Index fund. No more than 25-50% of your money should be in stock funds depending on your age.

About 25% should be in foreign currency cash in a high interest CD overseas. Think Singapore, Hong Kong, New Zealand, Australia, Canada, or Switzerland. You do have to report these accounts on FBAR reports yearly to the Dept of Treasury to keep it legal mind you.

About 25% should be in precious metals like Platinum, Palladium, Silver and Gold.

That is a portfolio that will do well for you and is well-diversified. It has made me rich the last 15 years and is getting me richer.

Paul Bogle is the guru of Index Funds and I am a devotee who agrees that actively managed funds have higher fees and tend to perform less well than Index Funds.

[Contrarian Expatriate]

Yeah, my dad also told me to look at bonds as sort of a secondary thing, but he also said he didn't want to invest in individual stocks. He's just looking for something steady, so I don't think he'd want to play chicken with a bubble.

Bonds are in a bubble right now, that would be the worst thing you could invest in! Wait until that bubble pops.

It sounds like you need to spend $50 on a fee-based (not commission based) investment adviser. This is not the time for a novice to invest like it was a decade ago.

[abcdavid01]

Ugh, I feel like less of a novice than my own father though. smh

Thank you all for this information. I'll start compiling some things to tell him.

[Tsar]

I'm majoring in a finance major so I learned some things about Mutual Funds that aren't highly publicized. The Mutual Funds can do well and some can have great gains but many won't.

Some main reasons why I won't have or hold Mutual Funds:

401Ks were a scam. Companies removed pensions after 401Ks were created when the government gave their approval. Unlike pensions 401Ks might not last for a person's life and most peoples' retirement is highly dependent upon the mutual funds they are offered. Events like 2008 can wipe out half of a person's retirement. This "retirement" account doesn't benefit anyone except Wall Street and the companies that offer 401Ks on their product lines. They collect huge fees.

Most Mutual Funds have hidden fees and some can be as high as 7.5%.

Here are some links relating to Mutual Funds:

http://mutualfunds.about.com/od/mutualf ... sadvmf.htm

http://www.investopedia.com/articles/mu ... z2J5RaZU7s

http://online.wsj.com/article/SB1000142 ... 70722.html

http://books.google.com.tw/books?id=C0rTc50hhEEC

The Mutual Funds can be relatively good for people that are inexperienced with investments and lack the time to manage their own portfolios. ETFs would be a better option because they lack most of the fees and are passively managed investments.

I personally wouldn't own a 401K or Mutual Funds.

Upon retirement each time a person withdraws from 401K they will pay income taxes, every gain on the principal you contributed there will be capital gains taxes, and there will always be the hidden cost of inflation of the dollar.

Why not to own or contribute to a 401K
http://money.usnews.com/money/blogs/On- ... k/comments

I would rather own property abroad, keep assets in non-dollar denominated currencies, hold gold and silver, and manage any investments in the U.S. markets on my own.

[abcdavid01]

Okay, so right now I'm looking at GoldMoney and Vanguard for Index Funds and ETFs. Can anyone suggest good indexes to follow?

Also, where can I look as far as investing in foreign CDs? Here's one place I found:

https://www.everbank.com/personal/forei ... ncies.aspx

Is it better to go for basket CDs?