Individual Retirement Account (IRA) Investment - Mutual Funds

You are invested in Individual Retirement Accounttotal expense ratio is the fund's total annual
(IRA) certificates of deposits and bonds for youroperating expenses which includes management
retirement. These are excellent investments; butfees, distribution (12b-1) fees, and other expenses
you do not want all of your IRA investments inis expressed as a percentage of average net
just these type of savings because you can getassets.
locked in with low annual percentage yields.On September 15, 2006, $10,000 was
You want a much larger annual return on yourhypothetically invested among four mutual funds
investment but with low risk. Your goal is tothat fill the above qualifications. Here are the
maintain a comfortable life style whether thecurrent results.
market goes up or the market goes down.Investment as of September 15, 2006:
A excellent IRA investment option is a Mutual• $2,000.00 (114.92 shares) Balanced
Fund - the common name for an open-end• $2,500.00 (89.22 shares) Equity Income
investment company. Like other types of• $2,500.00 (139.60 shares) Multi-Cap
investment companies, mutual funds pool moneyCore
from many investors and invest the money in• $3,000.00 (20.19 shares) Speciality:
stocks, bonds, short-term money-marketHealth
instruments, or other securities. Mutual funds issue• $9,843.08 (actual total investment
redeemable shares that investors purchase-1.56%) shares purchased after initial fees
directly from the fund or through a broker forAs of May 11, 2007, the total return on these
the fund.funds is $11,201.51 11.20%. The combined total
Including an IRA investment as part of yourreturn includes income and capital gains that were
portfolio, you want a mutual fund to meet certaindistributed by these mutual funds. If the
conditions such as:distribution was not made and not reinvested, the
1) Return over long-term (5 years) should betotal return would be $10,595.56 5.96%.
above the average CD yields. An example wouldMutual funds are not guaranteed or insured by the
be a mutual fund that provided an 8% averageFDIC or any other government agency - even if
for 2002 through 2006. There is no guarantee ofyou buy through a bank and the fund carries the
past performance but it can help you assess thebank's name. There is no guarantee of past
fund's fluctuation.performance and always contact the mutual fund
2) Risk should be minimal. The risk ratings ofand read the prospectus before making an
mutual funds range from low to high. Risk is ainvestment.
standard deviation of the return on totalMutual Interest Data Service was created
investment.September 26, 1999. The objective is to be an
3) Distribution of income and/or capital gains thatexclusive resource based on finding top mutual
the mutual fund gives its shareholders should befunds that 1) distribute large income/capital gains
large. All distribution should be reinvested whichand 2) maintain performance growth for a 5 year
increases the number of shares owned. Takingperiod. To validate this niche, the above mutual
this action allows you not to be taxed for thefunds model was created. You can see the actual
income or capital gains received. You acquiredistribution and reinvestment for these
additional shares of the mutual fund at a lowerinvestments at
net asset value price because the share price isThis article is free for republishing
reduced by the amount of distribution.Source:
4) Total Expense ratio should be low or shouldOccupation: Founder of Mutual Interest Data
not exceed the average of other mutual fundsService, Ltd.
serving the same investment classification. The