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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. 

More ABC's of mutual funds

http://en.wikipedia.org/wiki/Mutual_fund

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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