Mutual Funds Are Paying Off

Wow, I just read my last post, and I would be surprised if it made any sense to anybody. Sorry about that. It sounded sorta like I just finished off a bottle of wine before I started writing it.

Succinctly, what I was trying to say was this: "It seems like my money will work more for me if I take some out of the money market account and put it into a mutual fund."

And after I sobered up, I did exactly that.

So, here's the breakdown.

I have an Ameritrade account, and I took the 100 and 200 level courses. Anyone can do it. Here's how to get there: Navigate to http://www.ameritrade.com/ and click on the 'Research & Ideas' tab. Then click on the 'Mutual Funds' link and then on the left navbar, click on the 'Investing Classroom' option. Make sure you take all the courses in 100 and 200 level, and then you'll know as much as I did before I made my choice. It's actually very interesting, what you will learn.

Then I bought 2 new mutual funds. I'll go ahead and tell you what I bought - I used what I learned in those courses to help guide me in my decision. So, this is just information, and not advice.

On January 23, I took $5,000 out my money market, and "Bought 132.908 PRLAX @ 37.62". On February 22, I took $10,000 out of my money market, and "Bought 260.892 DPCCX @ 38.33".

A couple days after I bought the China mutual fund, (DPCCX), it took a nose-dive. It was depressing, and I hated myself very much. If you don't believe me, google 'DPCCX', and look on the chart at what happened on 2/23. It sucked. But look at what happened between then and now. While you have the chart open, type in 'PRLAX' to see how my Latin America mutual fund (PRLAX) perfomed.

Right now, the $15,000 I invested into those 2 mutual funds is worth $17,650. I weight-averaged it to $15,000 invested over 3 1/3 months, or 0.27778 yr.

And here goes the math: $ (17,650 - 15,000) / $15,000 = 0.176667, or 17.6667%. I'm not a financial analyst, but I think that means I've made 17.6667% / 0.27778 yr = 63.6APR. Am I right? That sounds like an awful lot - especially when you consider the initial loss I had to make up for, in the beginning. Maybe I made a mistake in my calculation. I'll go back over it again, later. But one thing's for sure: I made me some money.

So, there you have it. I made about as much with $15,000 over a 3 1/3 month period invested in 2 somewhat risky mutual funds, as I will with the approximately $70,000 I have in my very safe money market account, in about 9 months at 5% APR - (I'm actually getting more like 4 1/2 %):

$70,000 * 1.05 = $73,500. $(73,500 - 70,000) / (9/12) = $2,625.

Correct me if I'm wrong. But if I'm right, this seems like a risk worth taking. I'll follow up again on what's going on. But I do plan to buy some more mutual fund pretty soon.