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 Mutual Fund?
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 Mutual 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
- 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