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MUTUAL FUND INVESTMENT TIPS

Prior to investing in any mutual fund, a few questions should be addressed:

1. What is your time horizon?

   Your time horizon is the amount of time you have to invest before you will need your invested funds.  Will the designated funds be used for retirement, children's education, to purchase a home or something else that creates a limited time frame?

2. What is your risk tolerance?

   Your risk tolerance is the amount of risk you're comfortable taking in order to achieve a desired return.  Higher returning investments are likely to have higher degrees of risk and greater volatility.

Once you have determined both your time objective and risk tolerance, establish a diversified portfolio that satisfies these perimeters.  To establish a diversified portfolio, click here. 

The next step would be to research thousands of mutual funds to determine which ones satisfy the requirements of your portfolio.  To simplify this tedious task, you can request the service of a Certified Financial Planner™.  

Mutual funds are either load or no-load funds.  True no load funds do not charge a commission for purchases or sales.  Loaded funds do charge a commission.  Most funds, but not all, will offer a choice between A, B, or C class shares.  For more information on the differences between the classes of shares, click here. Always read the prospectus carefully before purchasing any mutual fund.  The prospectus will contain information regarding costs and fees as well as other vital information.  You can obtain a mutual fund prospectus by contacting the mutual fund directly.

When comparing mutual funds based on return, make sure the returns are net figures. For example, if you compared a no-load with a loaded fund, ensure the returns of the loaded fund are net of all fees, expenses, and commissions.

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