2011 Stock Fund Investing Guide - Best Funds to Own

This is your 2011 stock fund investing guide for beginners, complete with suggested best funds to own. Since it's a guide to investing for beginners we keep it simple. The best funds might surprise you.

A stock fund is simply a collection of or portfolio of stocks that is professionally managed for its investors. Stocks are also called equities, and the funds that invest in them are often labeled as equity funds. The best funds for you in 2011 could be those that are actively managed in an attempt to beat their benchmark and their competition; or the best funds could be the passively managed INDEX variety that simply duplicate an index, which is their (and the competition's) benchmark. That said, our investing guide now divides funds into 9 basic types based on the equities (stocks) held in their portfolio.

Are the equities held large-cap, mid-cap or small-cap stocks? Are they value, growth, or a blend of both in nature? That gives you 3 (large, mid-sized, or small) times 3 (value, growth, or blend) basic types. For example, as a basic guide to investing for beginners: your best funds if you want to keep it simple and own just one are the LARGE-CAP, BLEND type. These invest in LARGE companies (in terms of market cap or capitalization) like GE, IBM, and EXXON - each of whose shares outstanding are worth well over $5 billion in the market. They also invest in a BLEND of both VALUE issues that they think are selling cheap, with good dividends... and GROWTH stocks that pay little in dividends but are expected by analysts to rise in price significantly in a thriving economy.

If you are a risk taker and want to speculate that the economy and corporate profits in 2011 will grow beyond expectations the best funds for you are the riskiest of the 9 types: SMALL-CAP GROWTH funds. They hold equities in small companies that pay virtually no dividends, but are often the best performers in a good market. Now I'll guide you back to the investing basics. Most stock funds are actively managed in an attempt to beat an index like the S&P 500, which is likely their benchmark for performance. Few succeed consistently. Problem: higher management expenses are passed on to you. Second problem: most of them sell through middlemen and this usually results in about a 5% sales charge that you pay upfront, off the top when you invest.

Now our investing guide gets more specific about the best funds for most people. We'll assume you want to keep it simple and not swing for a home run with the bases loaded. You want both dividends and rising stock prices in your portfolio, and would like to see names like Apple, Walmart, and Dupont in there, too. Plus, you don't want to pay extra for active management that might not produce good results. Your best stock funds are LARGE-CAP, BLEND INDEX funds. The best example would be an S&P 500 Index fund, where you own a piece of America's 500 largest and best companies.

Getting more specific, make sure you go with a NO-LOAD version. No-load means no sales charges. Index fund means no high yearly expenses. Now you've got the best funds because they never under perform their benchmark, and they cost much less than average to own. That's it - your basic 2011 stock fund investing guide for beginners - in 600 words or less. Your best funds: no-load, large-cap, blend, stock index funds.

Author James Leitz teaches investment basics, stocks, bonds, mutual funds, investing and how to invest in his investing guide for beginners called INVEST INFORMED. Put Jim's 40 years of investing experience to work for you and learn how to invest athttp://www.investinformed.com today.