Best Mutual Fund Investments for 2012

Economies Of Scale Definition - Best Mutual Fund Investments for 2012

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Even the best mutual fund investments could face strong headwinds in 2012, so finding the best investments in both stock and bond funds is the best way to cut losses if things get ugly. The best investments in both fund categories will have two characteristics in common, which makes finding the best easier than you may think.

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Economies Of Scale Definition

With Europe facing retreat and financial turmoil the best stock funds should be diversified domestic funds that spend in major American fellowships vs. International stocks. The U.S. Cheaper is not booming, but corporate profits look good for 2012. The best investments in the stock fund kind will be funds that hold stocks with perfect records for paying and addition dividends. The best funds will pay 2% or more in dividend income vs. Increase and small-company stock funds that pay puny if whatever in the form of dividends.

The best stock funds may be labeled as Equity income and/or Large-Cap, and they offer the investor less risk and volatility due to both the high quality of the stocks held in their investment portfolio and the relatively high dividend income they pay investors. To find the best investments look for stock funds rated as relatively low on the risk scale that pay more than 2% in dividend income. To get your best value look for a fund with a Total cost Ratio of less than.5%... With no sales charges called Loads that can cost you 5% when you invest.

Finding the best investments in the bond fund arena will be a bit harder in 2012. In 2011 bond fund investors made money even though bonds were paying income yields that were near narrative lows. With the 30 year U.S. Treasury Bond compliancy 3% and the 10 year note at 2%, how did investors make 8% or so in government bond funds last year? The value of bonds went up as interest rates continued to go lower and lower, production the fixed income bonds offer more attractive. When the best rate you can get on a one year bank Cd is less than 1% and the best rate for a five year Cd is 2%, don't expect rates to fall much more.

Long term bond funds might look like the best investments because they pay higher interest income. Don't be tempted, because along with the higher income comes much higher risk. When interest rates rise bond funds will lose money, and those that hold long-term bonds will lose the most. Here's how to find the best investments in the bond fund division in terms of risk vs. Reward.

Go with Intermediate-Term bond funds to lower your interest rate risk (losses due to interest rates going up). Go with high to medium quality Corporate Bond Funds vs. Government bond funds to boost your interest income without greatly addition your risk. To get the best investments look for no-load funds (no sales charges) with cost ratios of less than.25%. Why pay 3% or 4% in sales charges and over 1% a year in expenses to earn 2% to 3% in interest income with the possibility of losing money if interest rates go up in 2012 or in the years that follow?

We said upfront that the best mutual fund investments for 2012 for both fund categories (stocks and bonds) had two things in common. First, they are relatively conservative and are less risky than more aggressive alternatives. Second, the best investments feature low cost investing in the form of no sales charges and low every year expenses. Why pay 0 in sales charges off the top for a ,000 stock fund investment that also charges over 1.5% a year (about 0 the first year, addition as the value of your investment does)?

Where can you find your best investments at low cost? I've recommended the two largest fund fellowships in America for the past 30 years: Vanguard and Fidelity. They both offer bond funds and stock funds like I have discussed here. Sales charges are Zero, and on a ,000 investment every year expenses can be as puny as . A dollar saved is a dollar earned. Believe it or not, your best mutual fund investments for 2012 can also be the least precious to buy and hold.

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