My mother is a first generation immigrant. I was born and raised in the U.S. I speak fluent English. I also went to college in the U.S.
Due to these facts, my newly retired mother has deemed me responsible for deciding which mutual funds she should invest in, how much she should invest in and for how long. I got the Vanguard guide and I’ve been reading through it, but all of this stuff is beyond me. I don’t know how much she wants to invest, or how long she would want the fund for, and I don’t know how to explain the interest discrepancies and low risk versus high risk coupled with the high yield versus low yield part.
I think it would be best if I called the Vanguard representative and basically act as translator since my mom’s English isn’t that great. But she expects me to understand all of this by reading the booklet they sent me. Am I really stupid for not understanding the whole mutual fund process? I sure feel like it after reading about dividends and manager risk.
Any suggestions or advice anyone can offer me? This is getting frustrating because I feel like I’m supposed to understand this, but I just can’t get it.
What type of investing does she want to do, retirement, taxable? Does she have any 401k’s or anything like that currently? Also note that most of Vanguard funds require atleast $3,000 to start, except for the STAR fund (which is $1,000).
I would also post this OP at this forum link below… A very friendly group with a no nonsense approach to investing, especially with Vanguard:
You’re going to have to read a lot. And don’t just read info sent by a mutual fund company. There are a lot of companies, a lot of different types of funds, and a lot of different investing philosophies. You need to be come familiar with a basic amount of terminology and some basic concepts before investing a single penny. Don’t just do it for your mother. Presumably you have, or will have, money of your own to invest.
You must educate yourself. Simply talking a representative from a mutual fund company or any company is not good enough. I would go to the library or the bookstore and get some recent books about mutual funds and investing and money management in general. You might not be very interested in these subjects – many people aren’t – but you really have no choice. You really cannot hope that a representative from a mutual fund company – or any company – is going to take responsibility for investing your mother’s money in the best way possible for her. You and your mother have to do some research and some self-education before trusting advice from anyone.
That’s great advice, thank you. Do you have any suggestions of which books to look at? There is a lot of research but flipping through all of them is making me feel like the situation is hopeless. I honestly don’t know where to start because I’m not interested in finances at all so I don’t know where to start, really. I need the terms and whole process described in layman’s terms so I can understand it and begin to draw my own conclusions.
Trunk, my mom has money saved up in the bank and would like to invest in mutual funds since she’s not touching the bulk of her money. I don’t know the total amount that she has nor how much she wants to invest. She wants me to tell her how much to invest by looking at different mutual funds.
I’m not going to suggest any titles. The easiest thing is just to go to the bookstore or library and start browsing in the appropriate sections. Flip through some books and find something that’s appropriate for you. I haven’t read a ‘basic investing’ book in years, and if I wanted to find a good current one, I would go to a bookstore, library or Amazon.com and start browsing. In any case, tell your mother that you won’t be investing a penny until you’ve had time to learn more about investments.
And Trunk’s comments are very pertinent. Retirement is not usually the time you begin to take money out of a bank account to put it into mutual funds. Normally, you invest in mutual funds, stocks, real estate investment trusts, etc., while you are young and working. As you grow older, you begin to pull money out of those investments and put that money into much safer investments. By the time you’re retired, the vast bulk of your money should usually be in investments that carry very little risk.
I’m no investment advisor, but if your mother is no longer working, doesn’t know anything about investing and doesn’t understand English very well, the percentage of her money that I’d put into mutual funds would be very small. Of course, there are funds that are very risky, and funds that are very conservative, but that’s something you’ll learn about as you continue reading.
In my opinion, you’re better off earning bank account interest, however feeble, while you slowly educate yourself, instead of recklessly taking the plunge based on advice from a mutual fund salesman.