14 year old interested in Investing. Do mutual funds work?

Hey guys, Im wondering if a Mutual Fund is the thing for me. TD Bank (in Canada) looks very promising, but very complicated as well. Right now, I have about $1,500 and my younger brother has about $4,200, both of us are thinking of doing a joint-account, but not on paper (because you have to be the age of majority). So instead, my father will register our "Non-Registered" account in TD bank for us, and when we want to stop, we will split the money by original investment percentage (If it does go through ,then both of us have put in $5,700, me being propetier of about %26.31 of the investment, while the scrooge, my brother, will be owning about %73.68 of it.

Are there any other types of Investments that will probably work for me? Im looking for medium/high income from the Fund/Bond.

Please excuse my retardedness in Investments :P, but whats the type of investment that has a fixed annual rate of income (no risk at all) like a 8% annual growth but your capital isnt exposed to risk ?

Awesome! I wish I invested a bit when I was 14! You have no idea how incredible your measly investment "Could" be a meal ticket for you some day.

Got Excel? Download this template from Microsoft::
http://office.microsoft.com/en-us/templates/TC010175321033.aspx?pid=CT101444811033

Now.. Example... Lets go NO risk.. CD's are great fro that...
I go to
Bankrate.com and look up the best CD rates. (often Banks that you can work by mail and online will have a lot better rates than anyone local. make sure you check that before you go to your local B of A or WElls Fargo)
Rates stink right now for CD's a year ago they were over 5% at some banks...
But I see First Internet Bank of Indiana has a one year CD at an APY (Anuual Percentage Yield) of 3.65%

SO plug into the template I sent above and look down the road 7 years of that rate... I have you in seven years having $7,356.00!

string that out to when you are 28 ... 14 years from now... there will be $9,465.00

The point is the magic of investing and compound Interest. and that is a lousy rate. You are going for 8%... OK thats probably a safe rate to shoot for in mutual funds or a good steady stock.

SO I plugged in your $5,700.00 at 8%
7 years gets you a $9,960 return 14 years is $17,404 !!!!!
(before taxes, your interest will be taxed each year.. but you're 14 don't worry too much about that now... you don't make enough in the end to owe anything and or very little because you are a dependent)

Thus if you're mutual fund choice gets say an average return of 10% (such should be your minimal goal in my opinion) your $4,700.00 will go to 7 years $11,445.00 14 years $22,792,01 and 20 years just for kicks... $41,770.00!)

You have upped your risk in mutual funds.. It maynot work out to 10%in the end. BUt it is not likely to lose you money over that time.... If Mutual funds did that.. I doubt there would be much business for them.. how about you

Lets up the risk... I gambled $2500.00 I inherited and left it be ... back in 80's it was invested in BUD.. Anheuser-Busch...

When I cashed it out 20 years later it was over $70,000 after dividend reinvestment. (and actually it is still invested in stocks five years later and is now worth over $200,000.00)

My point is... when you are 14.. you have the opportunity to gamble... now that I have this large amount of money saved... I personally have moved a lot of it to less risky.. like the CD's mentioned above.

You can learn a lot from Bankrate.com as well as http://investopedia.com

My point is.. that 6 or 7 thousand dollars might look juicy say 7 years from now. down payment for a car? ( I know it's both you and your bro's but I am trying to keep things simple here). Personally the only reason I would consider taking it out in 7 years would be for college...

As for scrooge... well he's sitting prettier than you bud... time to get to work and put a lousy $5 a week into your future. You might remember this question answer someday very very fondly .. while you sip your drink after snorkeling and para sailing on some tropical beach...

Point is.. you're 14... I say take the higher risk.. but not too high. work with people you believe in and are reputable. find a stock or two and put it in. (or a good low fee, no or low load mutual fund) Act like the money does not exist. Act like you lost it for a few years. When you find it again.. you'll be hooked up!

Best of luck!

Mutual funds work if you spend a little effort to learn about timing your buys and sells. Don't just buy and hold, hoping it goes up. Instead, learn something about how markets behave.

One thing to learn is "50% retracement rule." It's the simplest, most reliable trading rule.

Also you need to learn the recommended strategy for bull markets and bear markets, because it's different.

See http://commonsensetrading.googlepages.com

There is nothing diskless but for the short-term and only short-term you will benefit from

depositing your money to a bank in turkey and get 18% return instead of 8%...

in long-term, according to PPP, the inflation will adjust....

Some things you may need to know about mutual funds.

About 75% of them under perform the stock market. All of them have management fees. Some of them have sales loads.

There are good mutual funds, but you really have to do your homework. You need to check annual returns for the past 10 years. You need to look at management expenses. And you need to stay away from funds with sales loads. All of these fees are just too much to overcome.

You might look at DRIP Plans.

They are seldom talked about because brokers make very little money when they suggest them. Yet, they have proven to be one of the best, if not the best, long-term strategy on Wall Street.

They are perfect for small investors, as well as big investors. They are safe and allow you to not care about whether the market is going up or down.

Just consult with your parents, they will put you in the right direction.

Good Luck

All investing involves a certain amount of risk and there is no guarantee of return. At your age I would consider any investment as long term, so a mutual fund such as Vanguard, Fidelity, or American funds would be the best. From any of those funds I would select one that is invested in major companies throughout the world, thereby spreading your risk.

Just find a mutual fund that looks reliable and invest. In my opinion, its better to play stocks. You can get around like 50% return/annum if you invest carefully on big companies that have medium sized % changes such as companies like chevron, rio tinto, alcoa, barrick gold etc. Oh, I don't think you can get an 8% return without some risk.

There are literally thousands of mutual funds. Most of them are either "load" funds where you pay a "sales charge" up front, and there are "no load" funds where there is no "sales charge" up front. There are also management and other fees to consider which may differ from fund to fund.

Most financial columnist that I read seem to think there are no significant difference in returns simply because a fund is a "load" fund. They then recommend looking at "no load" funds.

Mutual funds also have a theme for their investment. For example, some may concentrate on large capitalized companies, some on small cap companies, some invest in international companies, some in companies that don't invest in Israel, some that invest in companies that are "green" and so on.

The best thing to do is to read as much as you can before investing a dime. Don't invest everything all at once. And have an idea as to your objectives: do you want to be aggressive, mildly aggressive, conservative?

Some websites to look at are Motley Fool's website and Morningstar to name two.

Good luck.

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