What Is A Low Fee, Low Load Mutual Fund That Makes Sense To Park About $8k In?

[Terrill]

I have recently been sick and able to work less; i have very little reserve but would like to put that amount of money in a relatively low risk and low fee mutual fund. in this market, does a mutual fund make sense and any advice there?

[Jancsi]

you might be better looking at a stable,(Johnson & Johnson, Altria, Wal-mart,) dividend type of stock. Google; high paying dividend stocks. Stay under yields paying 5% and have consistently paid dividends for the last 10 to 20 years. Reinvest the dividend. You only pay 15% on dividend yield income verses regular income tax rates. You can do this on e-trade for only $9.99. Make sure you mark reinvest dividend or it will not happen. Reinvested dividends are free. E-trade is great to work with, if you call them they will walk you through the whole process. Mutual funds have hidden fees, principle goes up and down and unless you're in an EFT you usually don't get the 15% dividend tax rate you would get with an individual stock. I know the stock can go up and down too but if you pick a reliable stock that's been around for a long time now is a good time to buy; most stock prices are down and even during 2008 2009 these stock continued to pay dividends and did not change as much as the most stocks did. Just a suggestion.   KKL 26 months ago

[Qamar]

The Vanguard GNMA fund has a $20/year account service fee if the account balance is below $10,000.The management expense fee is 0.19% plus a 0.04 misc expense for a total annual fund operating expense of 0.23%. That is 23 basis points. 1% = 100 basis points.https://personal.vanguard.com/us/funds/snapshot?FundId=0036&FundIntExt=INTI usually don't recommend to my clients to reinvest dividends. There are a number of reason.1. Dividends reinvested put those dividends at risk should the value of the fund drop.(Not as much of a chance of this happening in the GNMA fund as compared to say a fund that has Netflix, for example as part of it's holdings. I usually recommend to my clients to take the dividends and put them someplace else,(Municipal bond mutual fund for example.) If done right the interest from the Municipal mutual fund can be income tax free.(It does count toward tax on Social Security benefits if you reach certain income levels.)2. When you buy and hold mutual fund shares, you will owe income tax on any ordinary dividends in the year you receive or reinvest them. And, in addition to owing taxes on any personal capital gains when you sell your shares, you may also have to pay taxes each year on the fund's capital gains. That's because the law requires mutual funds to distribute capital gains to shareholders if they sell securities for a profit that can't be offset by a loss. If you want to sell shares purchased by those dividends, make sure the ones you sell are over a year old so they are taxed at a long term capital gain rate.3. The tax on the dividends create what is called a lost opportunity cost. If you did not have to pay the tax on the dividends each year, you could have invested the tax dollar instead. For example, if the dividends are reinvested, and the value of the fund goes up, those dividends have bought more shares or partial shares that generate usually a larger dividend the next year which creates more tax and so on. Most people usually do not consider the lost opportunity cost of tax because it is to much trouble to calculate or worry about. But for a fund held a long time, it can add up to thousands of dollars.As I mentioned before, I can not recommend any fund investment choice to you as I have not seen your risk profile. You need to sit down with an investment advisor to see what fund might benefit your specific situation.   WEALTHADVISOR 26 months ago