How do you choose a value/dividend mutual fund?

2018-07-13T19:38:24-04:00

I want to buy some value/dividend mutual funds. I understand how to choose a growth mutual fund, but I don't know what to look at for a value fund or how to compare one to the other.

Response by CSM Charles Hayden made Jul 13 at 2018 9:16 PM

2018-07-13T21:16:48-04:00

SPC Elijah J. Henry, MBA “Dave Ramsey” is the prolific financial guru for young people to become acquainted with. Please Google, Dave Ramsey and explore his offerings.

a GREAT budgeting/checking account tool is available for free at his site.

Response by MAJ Ken Landgren made Jul 13 at 2018 9:44 PM

2018-07-13T21:44:39-04:00

The Dow Jones 30 consists the largest 30 corporations and are blue chip stocks. Most conservative.
S&P 500 consists of the 500 largest US corporations. More risk than the DJ30.
NASDAQ consists primarily of technology stocks. More risk than the S&P 500.

You can use these stock indices for a comparison of mutual funds. If the S&P has a rate of return of 9% for ten years, and the fund you are looking at has a rate of return of 5%, it is poorly performing.

Risk = greater possibility of gains or losses due to the stock market in general. The risk can be defined by Beta. If the Beta is 1 the fund will follow the market. If the beta is higher like 1.5 the fund will do 50% better or worse than the stock market.

The Price to Earnings (PE) ratio also is a metric of risk. The higher the PE ratio, the more expectation is reflected in the price of the stock.

There are funds which focus on dividend pay out. They are companies who are predominantly stable and have more cash than they know what to do with.

Response by SGT Private RallyPoint Member made Jul 15 at 2018 1:25 PM

2018-07-15T13:25:55-04:00

If you are still serving, the TSP is your best option. Roth IRA, C, S, And I funds. Max out your contributions and retire a tax free millionaire.

Response by MAJ Ken Landgren made Jul 17 at 2019 5:08 PM

2019-07-17T17:08:50-04:00

The tax breaks and matching funds is free money for your retirement.