Mutual funds can be a great way for individual investors to build wealth. That said, there is a veritable sea of content on the internet about mutual funds – much of varying quality. So, if you’re interested in learning how to buy mutual funds and don’t want to invest a lot of time separating the wheat from the chaff, here is a quick video from eHow on some things to look for when shopping for a fund. Its a bit dry, but the advice is unbiased and solid.
In case you don’t have access to this video, the main points are summarized here:
1. Review the funds 10 year track record. How well your prospect fund has performed relative to its peers?
2. Look at management: How long has the manager been handling the fund? You want a good manager who has been there for a while.
3. What is your funds strategy? Has the fund management stuck to the strategy over time? Is the strategy appropriate for you?
4. Check resources like Morningstar.com to get more information
For more on this topic, feel free to check our other postings:
The Pros and Cons of Mutual Funds
Some Drawbacks of Mutual Funds
Use Mutual Funds to Select Stocks
James Hendrickson
James Hendrickson is an internet entrepreneur, blogging junky, hunter and personal finance geek. When he’s not lurking in coffee shops in Portland, Oregon, you’ll find him in the Pacific Northwest’s great outdoors. James has a masters degree in Sociology from the University of Maryland at College Park and a Bachelors degree on Sociology from Earlham College. He loves individual stocks, bonds and precious metals.
I would also recommend looking at the fees charged. Some are higher than others.
Kathy,
Excellent point – the lower the fee the better.
Chad,
I think its okay to have shares in some funds with strong management. Its rare, but some managers – like Peter Lynch do manage to beat the stock market consistently over time.
Thanks,
James
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