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