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Author: OldToad One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75823  
Subject: Re: Retirement through Mutual Funds... Date: 9/30/1999 10:00 AM
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Mishushina: In part yous asked ...My question, should I reduce the amount I send to the mutual fund until the price drops, or should I just leave it be?...but with the mutual fund so high right now, I'm wondering if I'm investing Foolishly now? Is my money working best for me?

My $0.02:

Although mutual funds are made up of individual stocks, you should not look or think of them the same way you would think of a single stock. Hopefully, the fund manager is doing his/her job and buying and selling stocks/bonds to maximize return to the shareholders. The fact that a mutual fund is up, that is, higher today than it was a while ago, has nothing to do with the market sentiment that drives single stocks. It does mean that someone is managing the fund well and getting a good return on the invested dollar. A mutual fund will not go down because the public becomes disenchanted with the fund. It will go down if the stocks in which the fund is invested go down on average. If the fund manager does his/her job really well, the fund will never go down, and will only rise in value. The likelyhood of that happening is small (never going down, even a little bit), but over the long-term that is why you are investing in mutual funds. No matter how much it costs for a single share of a fund, the return on investment will be the same. (If you expect a 20% return from a fund at $10/share, you should expect that in one year, a single share will cost $12, and if it costs $100/share now, it will cost $120 a share in a year. With funds, it is all relative.)

Hope this helped, ask again if you have more questions.

OldToad

PS. It is getting to be close to the end of the calendar year. Mutual funds still have to pass capital gains and dividends on to their investors. Be careful that you don't put money into your funds just before they declare dividends. You'll get some of your money back, and get the opportunity to pay taxes on it also.
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