How to Buy Mutual Funds

Tips on buying mutual funds

1. Find a financial adviser or broker to advise you on your purchase of mutual funds. With his or her help, get a good feel for what mutual funds can do for you, how many risks you’re willing to take and what you think your investment goals should be. Keep in mind that not all of your assets should be put into mutual funds.
2. Begin searching for the mutual funds that will work for you. Several financial magazines and Web sites like Schwab.com have tools that evaluate the performance of specific funds. Carefully examine the long-term performance of a fund and the company behind it. If you find something you like, get a copy of the mutual fund's prospectus.
3. Many beginners in the world of mutual funds go with index funds. This type of fund is a good bet for those who want their performance to closely mirror that of an index. Index fund typically have low management fees. Given how hard it is for a non-index fund to beat the market, these have become very popular.
4. If you're not ready to seek the help or advice of an adviser or broker, begin talking with people in your life like your boss, co-workers, neighbors or family members about mutual funds. You never know just how much one of these people might know about investing and mutual funds.
5. If you are ready to buy, definitely do it through either an online broker or the actual mutual fund itself. If you’ve hired a financial adviser to assist you in deciding on a mutual fund, he can make the transaction for you as well.

Caution

It's absolutely necessary that you closely examine the volatility of any mutual fund in which you’re interested in investing. Look at its actions year-by-year when you’re doing your initial investigating. If you find a fund that’s shown stable and consistent progress each year, consider buying it.

Where to shop for mutual funds

Below are some great spots on the Web for investigating and learning about mutual funds:

Morningstar is the king of mutual fund data and performance. It allows its members to track their portfolios, learn about smart investments and gather data on mutual funds. You’ll also find advice on when to buy and sell funds, plus articles on developments in the world of mutual funds.

The client-owned investment company The Vanguard Group allows you to choose and manage not only mutual funds, but also IRAs, stocks and bonds. Vanguard is also known for its low cost index funds.

Fidelity Investments has a wide variety of proprietary and third party mutual funds, as well as a number of other financial services.

When you enter the home page of Principal Financial Group, you’ll find assistance with investing in mutual funds, 401K plans and various types of insurance. You must become a member to log-in and access the entire site.