Picking the best fund in what’s offered in a 401K or similar
work provided retirement account is left to those of us that don’t have an
understanding of how stocks and bonds work, and how they make our investment
grow.
Some schools are
starting to teach this information to our kids, in an economics class, but for
those of us that didn’t have the opportunity or interest to learn, there are
ways to pick the best fund of what is offered to us.
The first category
to look at is the “High Risk” investments in the retirement account. This is
where the most growth potential of the retirement account will take place.
(“Low Risk” would be the same as stuffing money in your mattress), No growth.
High risk means that
the fund you’re investing in will be global. This means your money will be
invested in Brazil ,
China , India ,
Italy , Russia ,
and other places including the United States .
The value of the
fund could change because of events that happen in the country in which the
business you’re invested in operates. Another
change to the value of the fund would be the currency exchange rate. Because of
these “Risks” is why you have the potential to make money in these funds.
If you don’t have a
great interest to put in a lot of time selecting the best fund in your 401K or similar retirement account I have an answer for you, the MONEY MANAGER.
The Money Manager or
Management, is the person that has a plan for the fund (called a prospectus).
The Money Manager
will either be very good at what he does (able to make money for investors in
the worst of times), or he can be doing a poor job, causing investors to lose
money.
Start by getting the
symbol for the fund you want to consider. This will be found in the information
your work provided, to pick your investment from. An example would be Fidelity
ContraFund, symbol “FCNTX”.
Now on to a site
that does the best job of providing fund information; http://www.MorningStar.com , here we will
have all the information about the fund you could possibly ask for.
When looking for the
fund’s management, look for a name of an individual, not “Team” or “Members", you want a name. No name, move on to the next fund. Also, look
for tenure of the manager of five years or more, then what you see
about the funds performance at MorningStar.com is his performance not someone
else.
Now at the top of
the page there is a window that says “quote”, and in this window type in the
fund symbol… in this example; FCNTX.
Everything about the
fund can be found here. Now go down the page looking on the right half till you
find “management”. The Money Manager for our sample fund is William Danoff.
Now go to http://www.Google.com and type in the managers name
into the search window. The result will be everything you need to know about
William Danoff. What we learn is that FCNTX is a very good fund to put our
money into because of William Danoff, plus we have lots of information at
MorningStar.com to back up his management performance.
I hope this is
helpful, and if you have questions please contact me.
Good investing,
Follow me at http://www.Twitter.com/StockMktTeacher
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