| If you know absolutely anything about investing, | | | | Other funds invest solely in foreign companies, |
| then you have probably heard of mutual funds. | | | | while some invest in certain sectors within the |
| Once an obscure investment vehicle, they are | | | | economy, such as the financial, technology, or |
| now popular with almost all investors. If you ask | | | | industrial sectors. Also, some mutual funds may |
| your average investor whether they have any of | | | | pick companies based on ideology, such as a |
| their investment dollars allocated to a fund, they | | | | socially responsible or environmental fund. There |
| will likely answer yes. There are literally trillions of | | | | are also index funds that simply invest in |
| dollars of American money currently invested in | | | | companies that are contained within a certain |
| mutual funds. | | | | index, such as the Dow Jones, or the S&P 500. |
| Funds have made investing for the average | | | | The most important thing to understand when |
| investor a little less complicated. A person no | | | | looking for a mutual fund is the cost structure. |
| longer has to sift through stocks individually in the | | | | There are four expenses you need to review |
| newspaper or spend hours watching the financial | | | | before investing. The first is the management |
| news on television. You can simply select a | | | | expense, which is a charge assed on your money |
| diversified fund that contains a bunch of different | | | | to pay the manager of the fund. The second is |
| stocks of companies that fit into a certain | | | | the administrative fee, which is usually assessed |
| paradigm, such as a fund containing nothing but | | | | annually to cover the costs of mailings, postage, |
| small cap stocks, mid-cap stocks, large cap | | | | etc. |
| stocks, technology stocks, bonds, etc. | | | | The next fee is the 12B-1 fee, which covers the |
| A mutual fund is really an investment company in | | | | cost of marketing and promotion. And finally, |
| and of itself, with a manager and other officers | | | | there are sometimes front-end loads and |
| who administer it. When you buy shares, you are | | | | back-end loads. A front-end load is a sales |
| buying a portion of the holdings of the fund, which | | | | commission charged as soon as you open the |
| contains many different stocks and bonds within | | | | account and invest your money. A back-end load, |
| the portfolio. And, just like with individual stocks | | | | also known as a deferred sales charge, is |
| and bonds, your shares increase in value when | | | | assessed on your money when you close the |
| the share price of stocks within the portfolio | | | | account. Back-end charges vary depending upon |
| appreciate, or when interest payments are made | | | | how long you have had the account. |
| on the bonds. As with stocks, you can sell your | | | | I hope this information has helped you to |
| shares in a mutual fund at any time. | | | | familiarize yourself with mutual funds. Try to set |
| There are many different types of funds. They | | | | aside some money for investing and start while |
| vary based on composition (stocks, bonds, or | | | | you are still young. The earlier you begin, the |
| fixed income securities such as money market | | | | more money you can potentially make down the |
| instruments), and strategy. Some funds, as | | | | road. Carefully examine the fee structure and |
| already mentioned, invest in companies that have | | | | investment strategy before investing and you |
| a particular market capitalization (i.e. large cap, mid | | | | should do fine. |
| cap, small cap). | | | | |