In putting together your best investment portfolio for 2014, 2015 and beyond you will want to focus on holding the best mutual funds in each of the asset classes. The best investment portfolio features both diversification and balance to keep risk moderate. Owning the best mutual funds make this simple to accomplish.
There are times when the best investment portfolio is aggressive in nature and the best mutual funds for stocks and bonds are those that chase the highest returns. With a stock market that has risen 5 consecutive years and a bond market that’s been on a roll for over 30 years… 2014, 2015 and beyond is not one of those times. Moderation is the key if you want to stay invested without taking undue risk. Let’s look at the three basic asset classes and more to find the best funds in each category for the average investor. We have many more Investing Help Articles Now Available.
Bond funds are also called “income funds” because their objective is to earn higher than average interest income and pay it to investors in the form of dividends. The primary risk factor in 2014, 2015 and beyond is the fact that fund share prices will fall if interest rates rise. The best investment portfolio will avoid the highest dividend yields offered by long term and/or high-yield (junk) bond funds. These are simply too volatile, too risky for the average investor. The best mutual funds in the bond area: intermediate-term, medium to high quality corporate bond funds.
The highest quality government bond funds pay too little in dividends, so avoid them. High dividends are a product of low-quality bond issues or long-term bond maturities in the fund portfolio, or both. The best investment portfolio for 2014, 2015 and beyond will take a moderate approach. The best mutual funds for earning a good dividend income without high risk are those that sacrifice little in the way of quality, while cutting “interest rate risk” considerably. Medium quality, intermediate-term corporate bond funds offer the best combination for good dividends with only moderate risk.
The best investment portfolio will not chase growth-stock funds that pay little if anything in dividends. The stock market has been hot for five years running, and growth stocks (like high-tech companies) have had a good run. If things go south from here the growth sector will likely be hardest hit. Equity-income (or growth and income) funds offer dividends with less emphasis on aggressive growth in the value of share prices. The best mutual funds in the stock department to hold: high quality, large-cap equity funds. The best example would be to own shares in an S&P 500 INDEX fund. There you would own a small piece of America’s 500 most valuable companies.
To further increase diversification and balance in your portfolio you might want to add some specialty stock funds that specialize in these sectors: gold, natural resources and perhaps real estate. These asset classes have proven in the past that they sometimes buck the trend when the stock market in general is under selling pressure. Above all else, the best investment portfolio for 2014, 2015 and beyond will be broadly diversified. Why not add some counterbalance just in case?
Money market funds are the best mutual funds for high safety. Go with tax-free money funds only if you are in a high tax bracket. For most investors, just go with a large general purpose money market fund. They don’t earn much interest now because money market rates are near record lows. When rates go up the dividend yield here will automatically follow in step. Today’s best investment portfolio should have some money tucked away in the money market awaiting future opportunity.
When putting together your best investment portfolio for 2014, 2015 and beyond, do not overlook the costs involved. The best mutual funds do not have heavy sales charges or high annual expenses that lower your net returns year after year. Search “no-load funds” on the internet and improve your portfolio performance by paying NO sales charges while saving money year after year with lower fund expenses. We have many more Investing Help Articles Now Available.