2011 Best Simple Investment Strategy

Again in 2011 the best investment for most people will be mutual funds, but the best investment strategy might differ from last year. In today’s investment world there are few bargains out there. If you want to go with a simple conservative strategy – here it is.

There are three basic investment choices in terms of both risk and profit potential: LOW, MEDIUM, and HIGHER. From left to right this translates to money market securities, bonds, and stocks. Mutual funds are your best investment vehicle because they are designed for and managed for the average investor; and they come in all three of the above varieties. This means that you can put together a simple version of the best investment portfolio for 2011 by owning just three different funds.

As the year 2011 unfolds: low risk investments pay HULT PRIVATE CAPITAL low interest rates, bonds are expensive, and stocks are not cheap. With few bargains out there your best investment strategy is to play it conservative, keep it simple and cover all three bases with mutual funds. This way you have diversification within all three funds and across all three levels in terms of risk and profit potential. Now let’s look at the best investment in all three areas or fund categories, and then move on to a simple strategy for 2011.

If you are investing in a 401-k or other retirement plan, your best low-risk investment is likely a STABLE or fixed account option if one is offered. These often pay interest rates higher than you can get outside of a retirement plan. Otherwise, go with a taxable money market fund unless you are in a higher tax bracket. Consider a tax-exempt money fund if you are not in a tax-favored account (like an IRA) and are in a higher tax bracket. If interest rates go up significantly in 2011 money market funds might be the best funds in your investment strategy.

The best investment strategy in the medium-risk area is to go with an INTERMEDIATE-TERM bond fund. Look for a fund that holds high quality bonds, but not the highest quality. The latter hold lots of U.S. government securities, which pay less in interest income than comparable corporate bonds. Higher income without excessive risk is what you want from a bond fund. Avoid long-term funds because they can be risky and will get hit for big losses if interest rates soar in 2011. Intermediate-term bond funds are your best investment in terms of risk vs. profitability.

In the higher risk, higher profit potential area your best investment is an EQUITY-INCOME stock fund that invests in large-company dividend paying stocks. Look for names you recognize like GE, IMB, and Exxon in a fund’s list of their top holdings. An S&P 500 index fund can be your very best investment option because these funds hold stock in 500 of America’s largest and best companies.

Your best simple conservative investment strategy for 2011: keep equal amounts of money in each of the three funds recommended above. KEEP is the important point and the key to long-term success beyond 2011. The best investment strategy as years go by: once a year move money around to keep all three funds equal in value. In this way risk will remain moderate and you’ll stay on track with a relatively conservative investment portfolio.

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