Posted on Jul 13, 2018
How do you choose a value/dividend mutual fund?
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I want to buy some value/dividend mutual funds. I understand how to choose a growth mutual fund, but I don't know what to look at for a value fund or how to compare one to the other.
Investing
Retirement
Money
Posted >1 y ago
Responses: 4
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The Dow Jones 30 consists the largest 30 corporations and are blue chip stocks. Most conservative.
S&P 500 consists of the 500 largest US corporations. More risk than the DJ30.
NASDAQ consists primarily of technology stocks. More risk than the S&P 500.
You can use these stock indices for a comparison of mutual funds. If the S&P has a rate of return of 9% for ten years, and the fund you are looking at has a rate of return of 5%, it is poorly performing.
Risk = greater possibility of gains or losses due to the stock market in general. The risk can be defined by Beta. If the Beta is 1 the fund will follow the market. If the beta is higher like 1.5 the fund will do 50% better or worse than the stock market.
The Price to Earnings (PE) ratio also is a metric of risk. The higher the PE ratio, the more expectation is reflected in the price of the stock.
There are funds which focus on dividend pay out. They are companies who are predominantly stable and have more cash than they know what to do with.
S&P 500 consists of the 500 largest US corporations. More risk than the DJ30.
NASDAQ consists primarily of technology stocks. More risk than the S&P 500.
You can use these stock indices for a comparison of mutual funds. If the S&P has a rate of return of 9% for ten years, and the fund you are looking at has a rate of return of 5%, it is poorly performing.
Risk = greater possibility of gains or losses due to the stock market in general. The risk can be defined by Beta. If the Beta is 1 the fund will follow the market. If the beta is higher like 1.5 the fund will do 50% better or worse than the stock market.
The Price to Earnings (PE) ratio also is a metric of risk. The higher the PE ratio, the more expectation is reflected in the price of the stock.
There are funds which focus on dividend pay out. They are companies who are predominantly stable and have more cash than they know what to do with.
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MAJ Ken Landgren
SPC Elijah J. Henry, MBA - Your Roth IRA is not well diversified as 80% is invested overseas. Your income/cannabis is not well diversified from the perspective of it is in a single industry, I bet this is the fund that you want hit a homerun with. Fundrise seems to be a good investment as it has beaten the stock market over 5 years. Although your investments in industries are parochial in nature, investing in 3 industries is giving it some diversity.
Do you get matching funds for your IRA and is it a Standard or Roth IRA?
Do you get matching funds for your IRA and is it a Standard or Roth IRA?
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SPC Elijah J. Henry, MBA
MAJ Ken Landgren - Thank you for the feedback! It is a Roth IRA with no matching funds.
There's a lot of diversification within the sectors; you can click on those slices for more information. What allocation would you recommend? Currently the US is 20 to 25% of the global GDP. https://www.visualcapitalist.com/74-trillion-global-economy-one-chart/ I'm betting it will go down more by the time I retire, which is why I am heavy on foreign stuff. But I'd like to know what you recommend and why, if you don't mind.
Income/cannabis is heavy on real estate, but also has cannabis, foreign bonds, domestic corporate bonds, and energy. I went industry and country agnostic on that one. I narrowed them down by information I could find on their P/E ratios, expense ratios, and dividend rates to give a cumulative expense ratio below 25 basis points and nearly 6% dividends. I'm trying to get that one up enough to provide consistent passive income in a few years.
I'm pretty sure I'm invested in a lot more than three industries overall.
There's a lot of diversification within the sectors; you can click on those slices for more information. What allocation would you recommend? Currently the US is 20 to 25% of the global GDP. https://www.visualcapitalist.com/74-trillion-global-economy-one-chart/ I'm betting it will go down more by the time I retire, which is why I am heavy on foreign stuff. But I'd like to know what you recommend and why, if you don't mind.
Income/cannabis is heavy on real estate, but also has cannabis, foreign bonds, domestic corporate bonds, and energy. I went industry and country agnostic on that one. I narrowed them down by information I could find on their P/E ratios, expense ratios, and dividend rates to give a cumulative expense ratio below 25 basis points and nearly 6% dividends. I'm trying to get that one up enough to provide consistent passive income in a few years.
I'm pretty sure I'm invested in a lot more than three industries overall.
The $74 Trillion Global Economy in One Chart
See how the multi-trillion dollar pie of the global economy gets divided between countries, based on the latest data from the World Bank from February 2017.
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SPC Elijah J. Henry, MBA “Dave Ramsey” is the prolific financial guru for young people to become acquainted with. Please Google, Dave Ramsey and explore his offerings.
a GREAT budgeting/checking account tool is available for free at his site.
a GREAT budgeting/checking account tool is available for free at his site.
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SPC Elijah J. Henry, MBA
CSM Charles Hayden - Vanguard is well known for its high quality funds, for sure. I do have a Roth IRA. I was generally following Dave Ramsey's fund recommendations (he recommends four categories, mine were imbalanced representations of those categories) but have decided to focus more on international small value funds. I think I've got too much wrapped up in one country. No empire lasts forever. Also we're overdue for a recession.
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CSM Charles Hayden
The Charles Schwab site has great tools for researching and comparing funds. Morningstar ratings are there also. Schwab’s site has so many aspects that I barely touch the surface. All of my investments are with Schwab. There is also a ‘Schwab Intelligent Investor’ /Portfolio that, after a series of questions that will “scientifically’ / automatically develop a portfolio for you. A Roth account is also available there.
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SPC Elijah J. Henry, MBA
My wife just got a Schwab account for her business, and she's been thinking about starting a retirement account there, too.
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