you invest (called front end) or when you sell. Load fees, money paid for the sale of the fund, are nothing less than a bite out of the gains your investment has made.
Then there’s the fund category to mull over. What’s in a name like growth or aggressive growth? By and large, there are no hard and fast rules. Your best insight into a fund’s strategy is found in its prospectus or by checking Morningstar (www.morningstar.net). There you’ll find a synopsis of funds with an overview and summary of their performance. You’ll see a list of the stocks and other investments the manager has bought into, and you’ll also get a sense of what strategies are being used to invest the fund’s money.
As for the type of funds a Generation Xer should gravitate toward, we suggest sturdy high-end mutual funds that hold blue-chip stocks, which can weather the many ups and downs of the years ahead. From there, the more aggressive, the better. You have years ahead during which the ups and the downs of the market will even out. With that in mind, we scanned Morningstar’s databases for very basic no load growth funds, which would tap into larger stocks in the Dow Industrials or the S&P 500. With a second screen, we fished out aggressive growth funds that could add spark to a portfolio.
For good, core large-cap funds, we looked to those with strong management, no-load charges and a solid five-year record of total returns. Fidelity Blue Chip Growth (800-544-8888) comes up as a fund honing in on stocks with good earnings-growth prospects. We like the fact that the fund has averaged 17.12% in total returns over the past five years. Other strong candidates include Franklin Mutual Qualified (800553-3014), which posted 18.47% in total returns, and T. Rowe Price Equity Income (800-638-5660), with 17.49%.
Among aggressive growth funds, you’re in for a rougher ride but potentially greater returns. PBHG Growth (800-809-8008) heads our list with a 29% average annual return, followed by Aim Aggressive Growth (800- 347-4246) with a 26% return, and Acorn (800-922-6769) with an annual average of 17.69%.
There you have your first steps in building a solid foundation for your future. Our next installment will look at young families and their special needs.
Financial Rx For Generation X
After completing our first worksheet, you may feel that you’re light years away from having any spare money to invest You’ve got loans– plenty of them–and somehow your money vanishes into thin air every month. For you, the overwhelmed, we’ve gathered up a few tips to help you start your investment program sooner rather than later.
There are plenty of ways that Gen Xers’ hard-earned cash gets sucked down the money drain month after month. Of course, any student loans are going to cut a sizable chunk from your take-home pay, but they must be repaid on time to protect your credit rating. But consider simple ways to cut your bills. Eat in, not out. We all know that restaurant meals