Looking around for a low risk mutual fund, who can point me in the right direction.

[on_ice]

I am a youngin, slowly learning more and more about money. For the past year I have been saving money in an online savings account with ING. Its time to bump it up a little so I want to try a mutual fund. I have been looking around on MSN money, but there is so much to choose from I dont know where to get started. What should I look for when looking for a long-term, low risk mutual fund? Thanks in advance.

[Occifer]

What risk are you willing to take and what kind of returns are you looking for?

There are some decent money market mutual funds (Fidelity Cash Reserves for exampe--FDRXX) that have seven day yields of about 5%. That's more than you'll make in any savings account. There's also virtually no risk at all in this type of fund, however the return rate will decrease if interest rates fall. There are also some decent bond funds out there, but many of the lower risk ones that invest in mainly Treasury bonds aren't doing much better than the Cash Reserves fund. You could also look into short and ultra-short term bond funds that aren't affected as much by shifts in interest rates.

If you want something that offers a greater chance of higher returns (with a greater risk), there are balanced funds out there that are mixes of stocks and bonds. Fidelity's Balanced Fund (FBALX) is about 60% stocks and 40% bonds. That's a nice mix and the fund has beat the S&P in returns over the past ten years and is rated five stars by Morningstar. IMO, it's one of the best bets out there if you want to put money in it for retirement but aren't comfortable with a lot of risk.

No matter what you do, look for funds with low expense ratios that do not charge loads. Fidelity and Vanguard are pretty much the best when it comes to low cost funds. IMO, any fund with fees over 1.5% or so is charging too much. You can find quality funds with solid performance with expenses under 1%.

[BAMF]

Make sure you check for back end loads as well as front end loads. Some crooks will try to get you that way. No matter what they tell you, if the fund has a front or back end load, WALK AWAY.

also, please let us know how much money we're talking about here. 500, 1000, 2000? Some funds have a min amount to invest. And by the way, never ever ever take someone's advice on what a 'nice' mix of stocks/bonds/etc is. you have to research them and find out for yourself what you're comfortable with, else you're just following the pack waiting for teh next disaster and hoping for the next miracle.

[on_ice]

Ok, I have saved $3000 in the past year, which I eventually want to have all of it in mutual funds. I want to start with maybe $1000 first though just to see/learn a little. I am already making 5.1% in some ING CD's, so I would want a little more return then that, and I don't plan on using this money for a minimun of like 10 years, probably more like 40 years (retirement, kinda scary that I am already thinking about that)

[BAMF]

Ok, I have saved $3000 in the past year, which I eventually want to have all of it in mutual funds. I want to start with maybe $1000 first though just to see/learn a little. I am already making 5.1% in some ING CD's, so I would want a little more return then that, and I don't plan on using this money for a minimun of like 10 years, probably more like 40 years (retirement, kinda scary that I am already thinking about that)

Did I hear retirement? Roth IRA...man. Put it in the Roth. The Roth fucking PWNS you. There is no other single 'safe' investment which in my opinion kicks as much ass as the Roth. I swing from the Roth's nuts.

That and stocks. For long term stocks in a good stable company are a pretty secure investment. Nothing is 100%, but if you do your homework and find a good, stable company turning consistent profits....well, lets just say in 20 or 30 years your stock will be doing pretty good.

[on_ice]

I actually learned a little bit about Roth IRA's in one of my economic classes. Tax free or something like that? How do I go about starting one of those?