How to Invest in Mutual Funds
Looking for a mutual fund to invest in, but not sure how to choose the the right one for you? Check out this handy guide to get yourself started.
If
you're too busy to pick your own stocks but still want to get into the
investment game, buy a mutual fund. Think of a mutual fund as a giant
investment club with a few million members who have all hired a fund manager
and a staff to pick and choose when to buy and sell their stocks.
Here's
the challenge. There are more than 9,000 mutual funds out there. So, unless
you're a professional analyst, you probably don't have the time, knowledge
or know-how to look at more than four or five before you get totally confused
and turned off. The 10 mutual fund families to the right have been around
for several decades and have excellent track records for management and
profitability. Each
of them is a "no-load" fund, which means no sales charge or commission
is taken out of your investment. Most brokers and financial planners will
not suggest these fund families for that reason.
But
have no fear. No-load fund companies have excellent customer service representatives
who will answer all of your questions, helping you understand which funds
fit your needs. Take advantage of all the free literature and information
they offer to learn how to start building wealth assets. Most of the fund
families offer investor education pages, which include a glossary, chat
groups, a multiple-choice test to judge your knowledge of investing, a
complete list of all their funds (including prospectus, annual report and application forms to download),
and an advisor who will respond to your questions by e-mail.
Each
of these funds allows you to open an account for $1,000, or to waive that
minimum, start an automatic monthly payment arrangement with $50 or $100
deducted from your bank account, the same way that you pay life insurance
or make mortgage payments. This is how you put yourself on your own payroll.
Treat
yourself like a creditor who has to be paid each month. Would you miss
the mortgage or Visa payment and not feel upset or guilty? Then treat
your retirement money the same way.
Mutual fund companies like Strong (800-368-1030), American
Century (800-343- 2021) and Invesco (800-2-INVESCO) allow you to start
automatic investment plans with as little as $50 a month. Only one
African American mutual fund has beaten the S & P 500 Index, with a 32%
return. The ProfitValue Fund managed by Eugene Profit (888-744-2337),
www.profitfunds.com, also allows new investors to open an account with
$1,000
or do $50 a month automatic investing.
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