Rookie: About to get rooked?

I am a rookie investor who doesn’t know much about stocks, etc. I want to invest a small amount, maybe 3000 USD (100,000 NT) or so. I am willing to take medium risk, but don’t have much time to research or deal with this investment everyday. I just want to put it somewhere for like half a year or a year, forget about it, and come back and hopefully it’ll make some money for me.
So now the questions are:
1) Are mutual funds the best choice in this scenario? If not, what do you suggest?
2) What are the chances of losing money with a fund?
3) I realize that there are many types of funds. Which type is suitable for me? I don’t want to be super conservative, I am willing to take some risk. But of course I don’t want to lose money. Is there a fund that generates over 30% in one year, that’s got acceptable risk levels? I understand you can never know…but what about your past experiences? What’s the most you’ve made or lost in a 1 year period with funds?

I wrote

Truthfully, Tycoon’s advice is pretty good. 

Don’t waste your time in MFs… The expense ratios will KILL your investment over the short-term. The medium term isn’t much better due to a tendency to average performance. So, only in the longer term, there’s a chance that your MF will be okay. But remember about 80% of MF underperform the market…! Hah!

Upfront charges will likely eat into your funds, leaving you underwater almost immediately. Anyway, many MFs have minimum amounts to invest, typically $2500-5000.

#1 Why not just simply open a broker account with $7 to $10 trades, choose a few ‘safe’ ETFs (maximum three, to keep your costs under control), your expense ratio would be about 1% for purchase, and hopefully less than 1% for sale.

#2 Then do some basic research here http://finance.yahoo.com/etf

#3 Then purchase a couple of broader market funds, like DIA or QQQQ or Spiders, then one with the exposure you want.

Do NOT trade this account. Only add money regularly to make sure that the balance is appropriate. Ignore it otherwise.

#4 Then start reading. It is really boring, there are no guarantees, but it will limit your cost structure.

Lastly, beware the risk of currency exchange, you may not want to exchange all your money at one time, but trickle feed it into the fund, so that any improvement in the exchange rate will be reflected in your exchange at least partly!

Good luck, don’t forget the reading!

Kenneth

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