Learn which is the right fund for you.
If you are going to invest, but you do not have the time to manage a stock portfolio on your own, then you should look at mutual funds. Basically, a mutual fund is a professionally managed fund that pools the investments of many different people. This money is then used to purchase a side variety of different stocks and bonds. What this means to an investor is that any mutual fund investment automatically comes with its own diverse portfolio. Here is an introduction to mutual funds that should help you figure out what you want to do with your money.
The other benefit of getting involved in a mutual fund is that you won’t have to worry about dealing with your own portfolio. Instead, you will have somebody else managing your portfolio for you – which is definitely a good idea if you are not particularly familiar with the decisions that need to be made in order to invest intelligently.
If you are worried that you do not have enough money to invest in a mutual fund – think again! There are many mutual funds out there that will take investments of as little as $50. This is a small and affordable investment that almost anybody can make.
Before you buy into a mutual fund, however, you should decide which type of mutual fund is best for you. Keep in mind, as well, that if you want to invest in more than one mutual fund, there is no reason why you can’t!
There are several types of mutual funds. Equity funds are some of the most common – basically, these are mutual funds that are formed with stock from several different companies. These types of funds generally have the most risk – but if you buy into an aggressive growth mutual fund, you will also have a chance at making a lot of money on your mutual fund investment in a short period of time.
Fixed-income funds generally have far more bonds than stocks. These funds are a good idea if you want to invest in a mutual fund, but you do not think that you can afford to take much of a risk. These mutual funds are generally pretty safe, though you are unlikely to get a very high return.
Once you’ve decided which type of mutual fund you would like to invest in, you should decide which mutual fund is best for you. You can do this by checking the growth rates and history of any mutual funds that you are thinking about joining. Don’t join mutual funds just because they have had a few good quarters, however. Make sure that the mutual fund you invest in has a strong history of steady, long-term growth.