Today I'd like to talk a little bit about mutual funds. They are in my opinion the best long term wealth building tool out there today. There are 8 basic types of mutual funds.
1, Money Market Funds
2, Bond Funds
3, Growth & Income Funds
4, Growth Funds
5, Aggressive Growth Funds
6, International & Global Stock funds
7, International Bond Funds
8, Specialty funds
In order to invest into a mutual fund you need to ask yourself why? Why are you investing? bond funds are good for long term investing you plan on keeping in the bank for awhile. Then there are your growth funds and aggressive growth funds, Both are good for college savings. They are good to keep for five or more years. International global stock funds are good vehicles to use when you want to diversify your portfolio, you can also gain on growing economies. International bond funds are good for when foreign interest rates are higher then in the USA. Please don't that international funds carry a bit more risk then traditional funds. Specialty funds are a good way to diversify between stocks. bonds and money market funds.
The key steps in gauging mutual funds are as follows.
A good record of adding value over a minimum of 5 years, i prefer 10 years.
Stable Portfolio management. <
An understandable investment strategy for managing risk.
a no load cost structure and competitive expense ratio.
Key signs of when to leave a mutual fund
Portfolio Manager leaves
The investment strategy changes significally
The fund company is sold
The lead portfolio manager starts managing the business rather than the portfolio
The funds performance deteriorates for two ore more years
Key Mutual Fund terms
NAV ( Net Asset Value) : A mutual fund's price per share or exchange-traded fund's per-share value. To get the NAV you divide the assets/shares.
No Load VS load
No load Mutual funds have no commissions, loaded funds charge commission.
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