Investing Guide

Remember to max out your Roth on January 3rd, 2007. This lets your money compound for the whole year. If you did not contribute last year, you have until April 15th, 2007 to contribute your maximum of $4,000 for the 06 year. I contributed my $4,000 for the 2006 year on January 3rd, and I plan to do the same for 07 year. My Roth performed quite well last year, earning about 24 percent last year. It did well because most of my holdings were foreign stocks. I use the holdings in my Roth for foreign exposure.

I currently allocate 25% to each of the 4 American Funds. They are Capital Income Builder (CAIBX), Capital Growth and Income (CWGIX), Small Cap World (SCMWX), and New World Fund (NEWFX). I plan to put money into these four funds again this year. I am not paying a load for these funds. It is never a good idea to buy a loaded fund. There are plenty of great no-load funds out there. The load is paying the financial advisors anyways.

I am a little concerned about asset bloat with the American Funds. All four of these funds have gotten very large. CAIBX and CWGIX hold larger capitalization securities, but they are both 80 billion dollar funds. SMCWX is suppose to be a small cap fund, but it is a mid cap growth fund according to Morningstar. SMCWX is a 20 billion dollar fund with close to 600 security holdings. Most small cap funds close their funds before the reach one billion because they cannot get a large enough position in small companies if they have too much money. NEWFX stands at 10.9 billion, but I like this fund because it is a conservative emerging market fund. It holds up well during bear markets.

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