Free Mutual Funds for Teens Investing Guide
Deciding on mutual funds for teens entails many of the same decisions as mutual funds for adults. Here’s a brief synopsis, a teen mutual fund investing guide if you will:
Where’s the horizon?
One of the most important things to consider when choosing investments, which is particularly true when selecting mutual funds for teens, is your time horizon. That is, how long can you afford to have this money stashed away?
- Are you going to need it when you’re in college?
- Will you need it directly after college?
- Do you want to save it as a down payment for your first home?
- Or will you not need it for a long, long time?
The further away your time horizon, that is, the longer you can afford to have it stashed away, the more aggressive you can be with your investments.
Some mutual funds for teens with shorter time horizons, teens that will need access to their cash in the near future, are going to be more conservative. Funds for teenagers that want to start a long-term investment program, can afford to be a little more risky.
To risk or not to risk
When a fund or an investment is called “aggressive” it means that it has the chance to fluctuate pretty wildly, that is, go up or go down a good bit in a short period of time.
When a fund or an investment is called “conservative” it means that it will likely stay relatively stable, that is, not go up or down very much in a short period of time.
Funds for risky teens
Aggressive investors are going to look to the hottest markets, and the top-performing funds. Some mutual funds for teens that have a long time horizon could be…
UGPIX – ProFunds Ultra China – up 57% in 2009
UGPSX – ProFunds Ultra China Service – up 56% in 2009
DXZLX – Direxion Latin America Bull – up 55% in 2009
*Prices as of 9-2009
*These are not recommendations, rather an invitation to do more research
Funds for conservative teens
Conservative investors are going to look to more stable, predictable funds. These are going to include what’s called “index” funds and “income” funds. Names like…
PRPFX – Permanent Portfolio – up 8.5% per year average
HSTRX – Hussman Strategic Total Return – up 8% per year average
DIA – Dow Jones Index Fund – up 5% in 2009
*Prices as of 9-2009
*These are not recommendations, rather an invitation to do more research
There are other questions involved in selecting mutual funds for teens, such as, what type of account to hold the funds in. Generally, Roth IRAs are a no-brainer for young people investing. Read Roth IRAs for Dummies.
As of the time of this writing, the market had been taking a beating for a good year or so. Most stocks and mutual funds are relatively cheap right now and probably represent good buying opportunities for people with time horizons of at least 3-5 years.
Learn about some individual stocks we’re watching
See what Suze Orman says about personal finance
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