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Tips on buying mutual funds

There are many companies ready to sell youpurchase mutual funds. Many discount brokers
mutual funds, but due to a wide variety ofwill offer access to hundreds or thousands of
fee structures, some companies are bettermutual funds at no cost (no transaction fee).
suited  to sell you mutual funds than others.Though you can buy mutual funds directly with
the fund companies, some people prefer
Before digging in to this subject, I highlydiscount brokers because they help simplify
recommend you read Before you buy mutualbookkeeping and are more up on technology
funds for more tips on what to look for whenthan  some  of  the  smaller  fund companies.
buying  mutual  funds.
Mutual Fund Companies The best way to buy
Let’s take a look at who wants to sellmutual funds is to go straight to the source.
you mutual funds and what their motives andBy investing directly with the mutual fund
fees are: Insurance Companies Insurancecompanies, you can do so without transaction
companies are a dangerous place to buy mutualcosts. Fund companies have no hidden agendas
funds. They love using the words "mutual– they are there to serve their
funds" because people trust mutual funds andcustomers,  the  mutual  fund  shareholders.
it is a known product. The problem is that
they prefer to sell and they like to wrapWhy are you buying this fund? Is it because
mutual funds into other products likeyou read about it in the paper or a neighbor
variable annuities – often taking awaytold you about it? Don't get caught in the
the advantages that mutual funds offer (liketrap of chasing performance. Buy a fund
liquidity.because it meets an objective in your
portfolio, not because it has done well
Mutual FundsGuide to Mutual Funds. Get therecently. Asset allocation is the key to
info you need.Guide2Biz.com Insurancesuccessful  investing.
salesmen are after the commissions they
receive when selling funds, which is why youReturns or Performance Don't focus too much
won’t find insurance salesmen sellingon returns. Any track record under 5 years is
no-load  funds.noise. Try to take a look at how a fund has
done over longer periods of time and try to
Banks Banks are great places for somecompare it to it peers or an index that
products, but not mutual funds. Banks, too,represents the type of asset class the fund
love selling funds of the loaded variety -is in. It is not fair to compare a government
but rarely offer much variety (only one orbond  fund  to  the  NASDAQ.
two fund families). They, too, receive
commissions. Banks are also known for havingRisk Take a look at the standard deviation of
very limited or incorrect information abouta fund. If Fund A did slightly better than
the mutual funds they sell. A study byFund B, but took twice as much risk as Fund
Consumer Reports concluded that the odds ofA, then Fund B would be the better choice.
getting good advice at the bank about fundsOther measures of risk include the Ulcer
was worse than one in six (the sales peopleIndex and the worst periods (ex. 1-month,
weren’t even asking the right3-month, one year). Don't take any risk that
questions and often gave wildly wrongyou are not comfortable with and never take
answers).What firm serves as the fund's adviser and
who manages the fund? It might not be a bad
Stock Brokers and Investment Advisors Theseidea to do some background checking to make
two  groups  are  a  little  trickier.sure it is a decent entity. The SEC is the
official watchdog for mutual funds and has
Some want to sell you loaded funds for ainformation about each fund and it's manager.
commission, others collect fees for adviceAlso  look  out  for  recent manager changes.
while selling no-load funds and others charge
a percentage of assets under management.Though a new fund manager may be just as good
Generally these companies are good foror better, it is important to realize that
advice, but if you are a do-it-yourselfer theall the fund statistics from before may not
next  two  choices  are  much better for you.be relevant, especially in an actively
managed fund.
Discount Stock Brokers This is a great way to



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