There are thousands of mutual funds available to the average investor. Although it’s nice to have options, having too many choices can become overwhelming. As you consider which mutual funds may fit your needs, keep these tips in mind.
When shopping for a mutual fund, be finicky. First, look a fund's long-term performance track record - you want a fund which that has fared well over a full market cycle. Also, investigate the fund's management history, keeping in mind that the fewer the changes in leadership, the better.
Expenses are important too. A sales charge, also known as a load, and other fund expenses can add up and hurt total returns.
Though past performance does not guarantee future results, researching a fund's performance history is an important consideration. Another method for measuring a mutual fund's success is to compare it to other funds with the same objective or to compare its long-term performance to the appropriate benchmark, also called an index.
But when in doubt, call in the professionals! Every mutual fund company has a team of experts ready to answer your questions and explain how their funds work. However, if you need extra personal attention and advice, a financial advisor may be the route for you.
Although the race to financial security is a long one, you don't have to run it alone.
To learn more about mutual fund fundamentals, visit the Mutual Fund Section of Investing Basics.
The information on this page is provided for educational purposes only and is not tax, legal, financial planning or investment advice. Neither the information nor any opinion expressed in this section constitutes an offer to buy or sell any securities or advisory products. The information provided is general and is not information reasonably sufficient upon which to base an investment decision and should not be considered a recommendation to purchase or sell any particular security. You should not regard this information as a substitute for the exercise of your own judgment. Investing involves risk.