Are Monthly Investment Plans for You?

Are Monthly Investment Plans for You?

I do not generally favor monthly investment plans, where an investor adds Rs 5000 or so every month to a fund program. My reason is practical. Most people do not stick with them religiously. Therefore, they delude themselves by thinking they are going to achieve substantive long-term goals with such plans. If, on the other hand, you can have money automatically .


If you can, it is best to evaluate your choices very carefully, then try tomake a larger initial purchase and have the courage to stay with it. I also do not think people should make long-term investments in bond or preferred funds. Common stocks perform better.

If you want to check performance records, most magazines produce an annual survey that evaluates the performance of most of the funds. Your stockbroker or library should have special fund performance rating services such as Arthur Weisenberger or the Lipper service.

Investor's Business Daily rates the prior 3-year record and shows the year to date and the prior year's percentage change in asset value for all mutual funds that are quoted daily in the newspaper. Additionally, several times a week it carries an article on a different fund and its investment activities.

An open-end fund continually issues new shares when people want to buy diem. Shares are normally redeemable at net asset value whenever present holders wish to sell. This is die most prevalent form of mutual fund.

A closed-end fund issues a fixed number of shares. Generally, shares are not redeemable at the option of a shareholder. Redemption takes place through secondary market transactions. Most closed-end fund shares are listed for trading on exchanges. There are ordinarily better long-term opportunities found in open-end mutual fund investing than in owning closed-end funds that are subject to the whims and discounts below book value of the auction marketplace.

A few people successfully trade aggressive no-load growth funds on a timing basis, using moving average lines. There are several services that specialize in fund switching. This requires considerable experience, timing, skill, and emotional discipline. I do not advise the typical investor to attempt to trade no-load funds, because mistakes would probably be made in timing of buy and sell points. Get aboard for the long pull.

Finally, some individual or professional stock traders use growth stock funds for their IRA or Keogh retirement plans. 

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