Mutual Funds For Dummies 6ed

作者主要推荐的就是Vanguard


Title: Mutual Funds For Dummies 6ed
Authors: Eric Tyson
Edition: 7
Finished Date: 2019-04-21
Rating: 3
Language: English
Genres: Finance
Level: Entry
Publishers: For Dummies
Publication Date: 2016-04-25
ISBN: 978-1119215516
Format: ePub
Pages: 432
Download: ePub

20% 还没有说到mutual fund重要的内容
一直在推销作者另外的一本书

Part 1 Getting started with Funds

A mutual fund: a vehicle that holds other investments: When you invest in a mutual fund, you’re contributing to a big pool of money that a mutual fund manager uses to buy other investments, such as stocks, bonds, and/or other assets that meet the fund’s investment objectives.”

Exchange-traded funds(ETFs): trade like stocks on a stock exchange

securities 有价证券

  • stocks
  • bonds

When you want to buy or sell a mutual fund, your decision needs to fit your overall financial objectives and individual situation.

e.g. tax

  • mutual fund companies
  • brokerage firms
  • insurers
  • banks
  • so on

Ch.1 Making more money, taking less risk

Intro to mutual funds

A mutual fund is a vehicle that holds other investments. A big pool of money invested by individuals that a mutual fund manager uses to buy other investments, such as stocks, bonds, and/or other assets that meet the fund’s investment objectives.

Understanding investments

The seemingly infinite number of investments out there is based on just 2 primary kinds of investments: lending investments and ownership investments.

1. lending investments:interest on your money

Lending is a type of investment in which the lender charges the borrower a fee (generally known as interest) until the original loan (typically know as the principal) gets paid back.

Fro example:

  • bank certificates of deposit (CDs)
  • United States (U.S.) Treasury bills
  • bonds issued by corporations

Best thing: being paid all the interest in addition to original investment (promises)

Warning: drawbacks of lending investments
  1. You may not get everything promised.

    Promises may get broken. e.g., a company goes bankrupt

  2. You get what you were promised, but because of big inflation, your money is simply worth less than you expected it to be worth

    e.g. college cost increases 8% yearly. Interest in bank: 4%

  3. You don’t share in the success of the organization to which you lend your money

    e.g. bondholder: no more rewards

2. ownership investments: more potential profit (and risk)

Real estate and stock are common ownership investments.

Generate profits in 2 ways:

  1. Through the investment’s own cash flow/income

    owner of apartment: receive rents

    owner of stocks: a portion of annual profits from companies ( in the form of a dividend)

  2. Through appreciation增值 in the value of the investment. the big advantage of being an owner versus a lender

Warning: drawbacks of ownership investments
  1. extra responsibilities
  2. depreciation. riskier than lending investments

the Mojore investment options

which investment vehicle you choose for a specific goal depends on:

  • where you are going
  • how fast you want to get there
  • what risks you’re willing to take

1. savings and money market accounts

Both are lending investment

Interest rats are low and stable

  • savings: FDIC insurance
  • money market: not insured, offer higher yields than savings

  • bank: savings and money market

  • mutual funds companies: money market funds

2. Bonds

the most common leading investment traded on securities markets

20% of all mutual fund assets

maturity date: the date when your principal is repaid

the interest rate is typically fixed

Bonds can flucurate in value with changes in interest rates.

e.g. bond 5%, market 7%, bond decreases values

2 primary kinds of investments

  1. leading investments

    • profit: interest
    • example

      • bank certificates of deposit (CDs)
      • United States Treasury bills
      • bonds issued by corporations

      You’re lending your money to an organization — the bank, the federal government, or a company — that pays you an agreed-upon rate of interest. You’re also promised that your principal (the original amount that you loaned) will be returned to you in full on a specific date.

    • drawbacks

      • You may not get everything you were promised, such as, companies go bankrupt
      • You get what you were promised, but because of the ravages of inflation, your money is simply worth less than you expected it to be worth.
      • appreciation: You don’t share in the success of the organization to which you lend your money.
  1. ownership investments

    • 2 ways to get profits

      1. through the investment’s own cash flow/income
        • example
          • rental income from rents
          • dividends from stocks
      2. through appreciation in the value of the investment

        • example
          • increase in real estate
          • increase in the price of stock
* drawbacks
    * responsibilities
        * pay insurance for rentals

    * depreciation

factors to choose a investment vehicle

  • where you’re going
  • how fast you want to get there
  • what risks you are willing to take

Pros of Mutual Funds

  • Easy diversification
  • Access to professional money managers
  • Low investment management costs

A financial intermediary: an organization that takes money from people who want to invest and then directs the money to those who need investment capital (another term for money).

  • bank
  • insurance companies

open-end vs closed-end funds

open-end funds: the fund issues as many shares as investors demand

closed-end funds: the mutual fund companies decide upfront exactly how many shares they’ll issue before they take on any investors.

Open-end funds are usually preferable to closed-end funds.

  • management talents: The better open-end funds attract more investors over time. Hence, they can afford to pay the necessary money to hire leading managers.
  • expenses: Because open-end funds can attract more investors, more money to manage, the better open-end funds charge lower annual operating expenses.
  • 100% investments: buy closed-end at least 5% discount

Ch 7 find the best funds

  1. no commission for each transaction => broker
  2. low operating expenses => fund management team

    a percentage of the fun’s assets or value: annual fee

    in the expense section of a fund’s prospectus Total Fund Operating Expenses

    The fee is

    • deducted before any return are paid
    • charged on a daily basis
  3. no-load => broker
    Read the prospectus to find whether the fund has load

    classes|meaning|action
    —|—|—
    A|front-end load |pay when buy
    B|back-end loads| deferred sales charge, decreasing over time, pay every year|pay when sell
    C|
    D|

  • high return means more risk
  • recognize manager expertise
    • avoid fund companies with little fund management experience and success
    • avoid novelty funds

Ch 8 understand prospectuses and annual reports

prospectuses

A prospectus: written and edited by an attorney

  • required by Securities law
  • SEC reviews the details of every prospectus

the most important information

  • the fund’s investment objectives
  • costs
  • performance history

details

  • cover page: the date of the prospectus
  • table of contents
  • fund profile: a synopsis of the main attributes of the fund

    • a description of the fun’s investment objectives
    • strategies
    • fees
    • operating expenses
    • a list of main risks that come with investing in the fund

    • annual total return
  • other information
    • who manages the fund
    • how long the fund has been in existence
    • what the fun’s total assets are
    • what is minimum initial investment amount is
    • how to purchase and redeem shares
  • investment objectives and risks



  • background of the investment adviser

  • financial highlights

    • yearly summary of the value of the fund’s shares
    • the distributions the fund has made

    • Net Asset Value (NAV): the price per share of the fund

annual reports

  • chairman’s letter and performance discussion

    • the performance of the fund
    • compare it to relevant benchmarks and comparable funds
    • overall financial market
    • compare with competitors
  • investment adviser’s thoughts: portfolio managers of fun explain how the economic environment affect the fun’s performance

  • performance

  • investment holding

Ch 9: best brokers

  • vanguard
    • low management expenses

Part 4: crafting your fund portfolio

Ch 10: create a fund portfolio

Asset allocation

asset allocation: the proportion of different investment types

  • stocks
  • bonds
  • international investments

time

  • <2 years: short term
    • money market
  • 3-7 years
    • short-term bond funds
  • >8 years

    • stocks
    • longer-term bonds

finding the recommended funds

taxable money market funds

  • Vanguard’s Prime Money Market (VMMXX)

    • operating expense ratio: 0.16
  • U.S. Treasury money market funds

    • Vanguard Treasury Money Market (VUSXXX)

      • operating expense ratio: 0.09%
      • minimum: $50,000
    • USAA’s Treasury Money Market (UATXX)

      • operating expense ratio: 0.06%
      • minimum: $3,000
  • municipal tax-free money market funds

    • Vanguard tax-exempt money market (VMSXX)
      • operating expense ratio: 0.15%
      • minimum: $3,000
    • T. Rowe Price Summit Municipal Money Market (TRSXX)
      • operating expense ratio: 0.1%
      • minimum: $25,000
    • USAA Tax-Exempt Money Market (USEXX)
      • operating expense ratio: 0.15%
      • minimum: $3,000

Ch 11: bonds

short-term bond funds

  • taxable short-term bond funds
    • Vanguard short-term investment-grade (VFSTX)
      • operating expense ratio: 0.2%
      • minimum: $3,000
  • U.S. Treasury short-term bond funds
    • Vanguard short-term treasury (operating expense ratio
      • operating expense ratio: 0.2%
      • minimum: $3,000
  • municipal tax-free short-term bond funds
    • Vanguard short-term tax-exempt (VWSTX)
      • operating expense ratio: 0.17%
      • minimum: $3,000
    • Vanguard Limited-Term tax-exempt (VMLTX)
      • operating expense ratio: 0.17%
      • minimum: $3,000

intermediate-term bond funds

  • taxable intermediate-term bond funds
    • Vanguard total bond market index (VBMFX)
      • operating expense ratio: 0.2%
      • minimum: $3,000
    • Vanguard total bond market ETF (BND)
      • operating expense ratio: 0.05%
    • Vanguard GNMA (VFIIX): invest in residential mortgages
      • operating expense ratio: 0.21%
      • minimum: $3,000
    • Vanguard Mortgage-Backed Securities ETF (VMBS)
      • operating expense ratio: 0.12%
    • Vanguard High Yield Corporate (VWEHX)
      • operating expense ratio: 0.23%
      • minimum: $3,000
    • Doge & Cox Income (DODIX)
      • operating expense ratio: 0.44%
      • minimum: $2,500
    • DoubleLine Total Return (DLTNX and)
      • operating expense ratio: 0.72%
      • minimum: $3,000
    • DoubleLine Total Return (DBLTX)
      • operating expense ratio: 0.47%
      • minimum: $100,000
  • U.S. Treasury intermediate-term bond funds
    • Vanguard intermediate-term treasury (VFITX)
    • Vanguard Inflation-protected securities (VIPSX)
  • municipal tax-free intermediate-term bond funds
    • Fidelity intermediate municipal income (FTMX)
    • Vanguard intermediate-term tax-exempt (VWITX)

long-term bond funds

  • taxable long-term bond funds

    • Vanguard long-term investment-grade (VWESX)

      ETF: Vanguard long-term corporate bond ETE (VCLT)

  • U.S.Treasury long-term bond funds

  • Vanguard long-term treasury (VUSTX)
  • Municipal tax-free long-term bond fonds
  • Vanguard long-term tax-exempt (VWLTX)

Ch 13: stock funds

hybrid funds: a mixture of different types of securities

balanced funds: maintain a fairly constant percentage of investment in stocks and bonds

  • Vanguard tax-managed balanced fund admiral shares
    • operating expense ratio: 0.12%
    • minimum: $10,000
  • Vanguard Wellesley Income
    • 60%: bonds
    • operating expense ratio: 0.25%
    • minimum: $3,000
  • Vanguard star fund (funds of funds)
    • 11 different Vanguard funds
      • 6 US stocks
      • 2 foreign stocks
      • 3 bonds
    • 65%: stocks
    • 35%: bonds
    • operating expense ratio: 0.34%
    • minimum: $1,000
  • Vanguard Income fund
    • 80%: bonds
    • 20%: stocks
  • Vanguard LifeStrategy Growth
    • 80%: stocks
    • 20%: bonds
  • Vanguard LifeStrategy Conservative Growth
  • Vanguard LifeStrategy Moderate Growth

passive managed stock mutual funds

  • Vanguard Total international stock index
  • Vanguard FTSE all-world ex-US ETF

asset allocation funds: These funds adjust the mix of different investments according to the portfolio manager’s economic expectations