Mutual Fund Basics
A mutual fund is a pool of money from numerous investors that is
invested in stocks, bonds, and other types of securities. The
securities and exchanges commission
has quite a bit more information about mutual funds.
Load or No-Load
I am partial to buying no load mutual funds. A no load mutual fund is
one that does not charge a sales commission to buy into the fund. Funds
that charge sales commissions do not perform any better than funds that
do not charge a commission. Bottom line, only look to buy mutual funds
that are "no-load".
What type of fund
There are many categories to choose from when selecting a fund. You
can buy stock funds in the following categories.
- Large Cap (Companies with large market capitalizations)
- Small Cap
- Medium Cap
- Growth
- Income
- International
- Specific sector
You can buy bond funds in the following categories.
- Corporate bonds - high yield
- Corporate bonds - Short term
- Corporate bonds - Long term
- Government bonds - Long term
- Government bonds - Short term
- Municipal bonds
You can also buy funds that are a combination of stock and bonds. In
fact, there are so many different type of funds that you can likely find
one that meets your investment goals.
Where to start?
The yahoo mutual fund
screener is a great place to begin your research. The "Mutual
Fund Investors Center" is a great place to get started with
more information about mutual funds.
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