My Investment Plans for College

   A mutual fund is an investment company that pools money from shareholders and invests in a diversified portfolio of securities.  There are four major types of mutual funds.   They are stock, bond, hybrid, and money market.  There are many differences between these different types of funds.  Prices of the stock funds rise and fall more often than other funds.  Stocks tend to have more movement than other major funds.  Money market funds are where investors put their money when they are looking for a safe place to invest money for a short period of time.  Bond funds are also very safe, hybrid mutual funds are a combination of bond funds and stock funds in one.  For my college portfolio, I plan to invest my money in bond and stock mutual funds.  They are the American Funds Capital World stock fund and Delaware Pooled Global Fixed-Income fund. I plan to invest in both of these for the next 7 years to save money for my college education.  These funds will protect my money because one invests in bonds, and the other in stocks.  There is less risk in bonds, but with stocks there is more return on your investment.

    The American Funds Capital World fund is in the world fund category. It is the type of fund that invests in companies all over the world.  This is important because if one part of the world’s economy is not doing well, the fund invests in another part.  This fund also has a five star rating from Morningstar (a company that researches mutual funds). Their expense ratio is also only 0.69%.  This is important when investing, because the company will not take a large percent of your return.  It also does better than most other mutual funds in its category as well as the MSCI index which is the Morgan Stanley Country Index.  They invest in common market sectors such as information, service, and manufacturing.  In 2007, their return was 22.60%.  The fund has a total of 117 billion in assets and they invest in value and large companies.  Their top five stocks are E.ON, RWE, Banco Santander, Bayer, and Diageo, and its portfolio managers managed the fund since 1993. Currently 96% of the fund is stocks and the other 4.0% is in cash, making this an excellent place to invest my money for college.

    To help diversify my portfolio, a portion of my college funds will be invested in Delaware Pooled Global Fixed-Income which is a world bonds fund.  I like this fund for many different reasons, but one of the most important is that the fund invests all over the world.  In addition, Morningstar gave it a rating of 4 stars and it has an expense ratio of 0.60%.  The average credit is the estimate of how low or how high the risk is of the company going bankrupt, and Delaware Pooled Global has a triple A rating. During 2007, their return has been 7.90% with 283 million dollars in assets.  They are also doing better than many other mutual funds in their category.  In addition, Delaware Pooled Global Fixed-Income has four portfolio managers that have been with the company since 1999.  Currently, 94% of the fund is made up of bonds and the other portion is all cash with holdings in Ireland (Republic OF), Japan Fin. Corp-Municipal Ent, Oesterrrichiche Kontrollbank, Japan Dev BK, and Eksportfinanp AS.  Their management stability, overall ratings, and return on investment make this an attractive fund to invest my college savings.

    Having one stock mutual fund and one bond mutual fund, helps bring the risk down by balancing my investments in a diversified portfolio.  I will not have all of my money only in bonds or only in stock mutual funds.  There are also many similarities between the two mutual funds that influenced me to choose them for my portfolio. Both have a high rating from Morningstar, investments worldwide, a low expense ratio, and a high return record. For these reason, both of these funds make an ideal place for me to save for college.

Invest Write Bibliography

Dickneider, Bill.  “Stockpot.”  The Stock Market Game. October 2007: 1,2.)

Dickneider, Bill.  “Travel Funds.”  The Stock Market Game.  November 2004:  3,4.)

“What is a Mutual Fund.”  Lipper Inc. 26 November 2007.

<https://personal.vanguard.com/VGApp/hnw/planningeducation/education/PEdIESelMFHwToSelMFContent.jsp>

“American Funds Capital World.”  Morningstar.  26 November 2007.  http://corporate.morningstar.com/US/asp/home.aspx?xmlfile=202.xml

“Delaware Pooled Global Fixed-Income.”  Morningstar.  26November2007.

http://corporate.morningstar.com/US/asp/home.aspx?xmlfile=202.xml