This is the third edition of 401-K class for nurses, (and whoever else may be snooping-thanks for snooping!).  Now I know you would rather read about fun stuff-you would rather watch American Idol, Dancing with the Stars, or whatever your favorite program is, than read about boring 401-K stuff-but let me ask you a couple of questions:

• Do you think Simon Cowell is going to be there for you when you want to retire???
• Do you think NBC or CBS and their advertisers care whether you spend your retirement time watching a 52 inch HDTV, in your paid for house with no debts,  or watching the 12 inch tv with rabbbit ears down at the homeless shelter????
• Do you think your kids are going to spring for your world travels when you retire from 40 years working the night shift in the ER????

No, I didn’t think so, so keep reading-or go continue to be stupid, and not pay attention to this till it is too late-YOU HAVE A CHOICE!!!!!

I want to discuss ACTIVELY managed mutual funds this week, after discussing index funds in our last class.

Actively managed funds, are just as described, they are managed by a person or group that makes investment decisions on which stocks to purchase.

One of the most famous fund managers/ funds, when you read about this in investing books,  is Peter Lynch, a past manager of Magellan-a Fidelity Mutual Fund.This fund had stellar returns during his management-that some would say has suffered since his retirement.  This has become the “poster child” for avoiding single manager funds.

When he or she retires, or is hired by another company for a huge raise, then where will your fund be?

Now, manager choice may  matter a lot when you are doing your own investing, but frequently in 401-K’s, the choice of funds available  are limited, in number and type,  to just a few funds.

So you may not be able to choose between a single or group manager. But I think it matters to at least know this information.

You can usually look this info up for free, by joining “Morningstar” or some other investment information site.  You give them info about yourself, to sign up, and then you are able to look up funds, and get other information-that for the most part is not slanted towards any one fund company.

You can also find out about the fund in your “prospectus”. This is the document that you get at least once a year in the mail from the fund company that you own in your 401-k.  It probably goes in the “circular file”-if you are like most nurses.  Next time you get one,think of me, and at least read the page that describes the type of fund, look at the list of stocks in their fund holdings, and read the paragraph or two from the fund manager about the past year’s results.

Now the next step, as mentioned above is finding the type  fund, you are currently investing.  The different types are numerous and somewhat complicated- mainly because the fund companies try to have a product for everyone’s needs.

They then end up with so many different funds-no one knows what is going on.  But here is a list of several common “actively managed” funds you may find in your 401-k and a little about them.

• Growth funds-consists of companies expected to “grow” or increase in value faster than the market.
• Value funds-consists of companies that the fund manager thinks are bargains-(cost less than the stock is worth).
• Income funds-consists of stocks that pay dividends-this means they pay a percentage of the value of the stock quarterly to stock-holders instead of keeping profits in the company.  Some feel this results in less volatility (rapid rise and  fall in stock prices).
• Balanced funds-funds that may hold growth and income stocks- (some balanced funds also hold bonds, we will discuss bonds and bond funds in another post).

I found this list of mutual fund terms on the Securities and Exchange Commission website.  Glossary of Key Mutual Fund Terms.

So, we come to the end of another exciting version of 401-k class for “Millionaire Nurses“PS

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