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Tips to Help You Succeed With Mutual Funds

Updated on February 14, 2012

Mutual funds are a terrific way to invest and have an instant diversification of your money. Basically, t a mutual fund is a pool of money that has been gathered together by a number of different people. Then one person the “fund manager” takes these investments and places them into a variety of different stocks related to the fund's objective. Some fund managers invest only in oil companies, precious metals, or utilities. Mutual funds are terrific for inexperienced investors as well as professional investors to keep a certain amount of money diversified in mutual funds without having to do it individually.

The first thing to consider when investing in mutual funds is getting information about the fund managers. Many fund managers control a wide variety of mutual funds, so if you are going through a common entity for your mutual fund investment it is more than likely this manager will also control that fund. So, getting the right information about your fund manager will help give you the confidence that you need to have when you give them your hard earned money.

You can ask the manager or company to provide you information o your fund manager

1. Education

2. Experience

3. Training

4. Previous Funds performance

The fund manager or firm is someone you are going to need to trust so always look at your managers fund performance in the past and present investments.

Know your fund and the risk tolerance associated with it. If, you are not comfortable with a fund that has wild swings at times it may not be the best investment for you. So, always take a close look at mutual fund prospectus before you invest in the fund. Stay within your comfortable risk tolerance for the best performance of the fund you are choosing.

Having a basic understanding of the workings of the stock market is also essential. Knowing about the funds and stocks that are invested in the fund can help you become a more knowledgeable consumer. If, something a fund manager doesn’t sit well with you ask if he lies to you move on to a different fund. Also if, your fund manager is taking more risk and the returns are not matching up it may be time to find a different mutual fund. So, always keep an eye on the market and at least invest in the knowledge of the basics of stock market investing.

Many funds have a variety of different outcomes as far as fees. There are several different types of fees that mutual fund providers can charge.

1. No load funds – means there are no upfront or back end fees for owning the mutual fund

2. Front-end loads – if you invest 100 dollars in a fund than 5% or 5 dollars automatically goes to the fund manager

3. Back end loads – when you decide to remove your money or sell the mutual fund share then the fund manager will take aheftier percentage based on what your return on the fund was.

So, before you invest make sure you understand the fees that are associated with the mutual fund you are thinking about entering into. Then decide on a cost vs. Return ration whether or not it is worth it if not look for another fund.


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  • Golfgal profile image

    Golfgal 5 years ago from McKinney, Texas

    Good basics, trusting the fund managers is the best way to invest. Choose a strategy and stick with it. Some people think buying and selling frequently trying to time the market is the way to go...a very costly proposition. Utility stocks pay good rates.