| You are invested in Individual Retirement Account | | | | total expense ratio is the fund's total annual |
| (IRA) certificates of deposits and bonds for your | | | | operating expenses which includes management |
| retirement. These are excellent investments; but | | | | fees, distribution (12b-1) fees, and other expenses |
| you do not want all of your IRA investments in | | | | is expressed as a percentage of average net |
| just these type of savings because you can get | | | | assets. |
| locked in with low annual percentage yields. | | | | On September 15, 2006, $10,000 was |
| You want a much larger annual return on your | | | | hypothetically invested among four mutual funds |
| investment but with low risk. Your goal is to | | | | that fill the above qualifications. Here are the |
| maintain a comfortable life style whether the | | | | current 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 money | | | | Core |
| from many investors and invest the money in | | | | • $3,000.00 (20.19 shares) Speciality: |
| stocks, bonds, short-term money-market | | | | Health |
| 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 for | | | | As 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 your | | | | return includes income and capital gains that were |
| portfolio, you want a mutual fund to meet certain | | | | distributed 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 be | | | | total return would be $10,595.56 5.96%. |
| above the average CD yields. An example would | | | | Mutual funds are not guaranteed or insured by the |
| be a mutual fund that provided an 8% average | | | | FDIC or any other government agency - even if |
| for 2002 through 2006. There is no guarantee of | | | | you buy through a bank and the fund carries the |
| past performance but it can help you assess the | | | | bank'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 of | | | | and read the prospectus before making an |
| mutual funds range from low to high. Risk is a | | | | investment. |
| standard deviation of the return on total | | | | Mutual Interest Data Service was created |
| investment. | | | | September 26, 1999. The objective is to be an |
| 3) Distribution of income and/or capital gains that | | | | exclusive resource based on finding top mutual |
| the mutual fund gives its shareholders should be | | | | funds that 1) distribute large income/capital gains |
| large. All distribution should be reinvested which | | | | and 2) maintain performance growth for a 5 year |
| increases the number of shares owned. Taking | | | | period. To validate this niche, the above mutual |
| this action allows you not to be taxed for the | | | | funds model was created. You can see the actual |
| income or capital gains received. You acquire | | | | distribution and reinvestment for these |
| additional shares of the mutual fund at a lower | | | | investments at |
| net asset value price because the share price is | | | | This article is free for republishing |
| reduced by the amount of distribution. | | | | Source: |
| 4) Total Expense ratio should be low or should | | | | Occupation: Founder of Mutual Interest Data |
| not exceed the average of other mutual funds | | | | Service, Ltd. |
| serving the same investment classification. The | | | | |