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Welcome to the first edition of Weekend Reading. A lot of blogs out there do this and I think it’s a fantastic idea. Most of the following links are from my blogroll, so I’d definitely recommend your taking the time to go through the blogs I link to occasionally. There’s some great information out there. This week there’s some great reading. Our topics include fuel prices, credit card companies and their targeting of college students, Warren Buffett’s advice to a novice investor, ways to save money when going out and advice on investing in dividend paying securities.

Ryan at The Better Credit Blog brings up a fantastic point regarding personal finance education (or the lack thereof) and how credit card companies specifically target college students because of their vulnerability. Check out How College Students are Taught Personal Finance by Credit Card Companies.

Tim Ferriss, author of The 4-Hour Workweek, recently attended the Berkshire Hathaway annual shareholders meeting and had the opportunity to ask Warren Buffett a question. He asked Mr. Buffett, “If you were 30 years old and had no dependents but a full-time job that precluded full-time investing, how would you invest your first million dollars, assuming that you can cover 18 months of expenses with other savings?” Warren Buffet responded with a very unexpected answer. Check out Tim’s post about this experience: Picking Warren Buffett’s Brain.

Michael at Money Musings talks about everyones favorite current subject: gas prices. It’s actually a redux to a previous post by him about the stress caused by increasing fuel costs. It’s an interesting read and also has a link to a downloadable excel spreadsheet which can be used to calculate fuel costs if it were to cost a certain amount ($6 a gallon, anyone?). Check Out Gas Price Stress Redux.

With the increase in fuel costs it’s becoming more difficult to stay within a budget, especially for us twenty-somethings. Trent at The Simple Dollar gives some practical advice on how to have fun and go out while keeping your costs low. Check out Sixteen Ways to Go Out on the Town on the Cheap.

Blake at Youngdough.com shares with his readers his strategy for investing in SOLID dividend paying securities. Check out How I Invest in Solid Dividend-Paying Securities.

That should be enough to keep you busy this weekend. I’d love to hear your comments on this weeks weekend reading. We’ll do this again next weekend.

I was talking to a friend of mine the other day about investing. She just recently received her tax refund and had yet to “spend it” as she said. Naturally I suggested that she invest it. We got to talking about what she might invest her money in and since she has absolutely no investing experience I suggested that she might consider a mutual fund. She had heard of mutual funds before, but wasn’t exactly sure what they are. Of course I told her she should read my blog post about mutual funds, when suddenly I realized I didn’t have one. Thinking that it was really quite irresponsible of me to not have covered this topic as of yet, I am now going to right this wrong. Welcome to Mutual Funds 101.

What is a Mutual Fund?

A Mutual Fund is a diversified portfolio of investments… essentially a ready-made, specifically focused, investment portfolio. A Mutual Fund is a large pool of money which is used to invest in stocks, bonds or other securities. Mutual Funds are attractive to a large number of people because it is easy to purchase shares and they are great for investors who do not have the time or the desire to create their own diversified investment portfolio. Mutual Funds are usually geared towards one of three different goals: income, growth or a mixture of the two. An income fund invest mainly in - you guessed it - income investments such as bonds, preferred stock and income-oriented common stock (stocks that pay a high dividend). A growth fund invests mainly in high-growth (often small or mid-cap stocks) stocks and other types of growth investments. And finally the growth/income fund would invest in a mixture of these types of investments so as to provide a stream of income to the investor as well as potential for future growth.

How do I purchase a Mutual Fund?

To invest in a Mutual Fund is similar to investing in the stock of a company. Mutual Funds are sold by the share, just as stocks are. The Net Asset Value (NAV) of a Mutual Fund refers to the value of just one share of a Mutual Fund. This NAV is updated daily. Investors have two choices when it comes to investing in a mutual fund. They can purchase shares of the fund from the fund company directly or purchase shares through a brokerage account.

If you already have a brokerage account you might consider purchasing shares of funds directly through your brokerage, so as to keep all of your investments in one “place.” One thing to keep in mind is that some brokerages charge a flat fee to invest in a fund. This fee might make it more practical to purchase directly from the mutual fund company.

Some brokerages include E*Trade, Scottrade and Zecco Trading. Some great Mutual Fund companies include Vanguard and T Rowe Price.

Update: A great place to do research on mutual funds is over at Morningstar.com