| There are many companies ready to sell you | | | | offer access to hundreds or thousands of mutual |
| mutual funds, but due to a wide variety of fee | | | | funds at no cost (no transaction fee). Though you |
| structures, some companies are better suited to | | | | can buy mutual funds directly with the fund |
| sell you mutual funds than others. | | | | companies, some people prefer discount brokers |
| Before digging in to this subject, I highly | | | | because they help simplify bookkeeping and are |
| recommend you read Before you buy mutual | | | | more up on technology than some of the smaller |
| funds for more tips on what to look for when | | | | fund companies. |
| buying mutual funds. | | | | Mutual Fund Companies The best way to buy |
| Let’s take a look at who wants to sell | | | | mutual funds is to go straight to the source. By |
| you mutual funds and what their motives and | | | | investing directly with the mutual fund companies, |
| fees are: Insurance Companies Insurance | | | | you can do so without transaction costs. Fund |
| companies are a dangerous place to buy mutual | | | | companies have no hidden agendas – |
| funds. They love using the words "mutual funds" | | | | they are there to serve their customers, the |
| because people trust mutual funds and it is a | | | | mutual fund shareholders. |
| known product. The problem is that they prefer | | | | Why are you buying this fund? Is it because you |
| to sell and they like to wrap mutual funds into | | | | read about it in the paper or a neighbor told you |
| other products like variable annuities – | | | | about it? Don't get caught in the trap of chasing |
| often taking away the advantages that mutual | | | | performance. Buy a fund because it meets an |
| funds offer (like liquidity. | | | | objective in your portfolio, not because it has |
| Mutual FundsGuide to Mutual Funds. Get the info | | | | done well recently. Asset allocation is the key to |
| you need.Guide2Biz.com Insurance salesmen are | | | | successful investing. |
| after the commissions they receive when selling | | | | Returns or Performance Don't focus too much on |
| funds, which is why you won’t find | | | | returns. Any track record under 5 years is noise. |
| insurance salesmen selling no-load funds. | | | | Try to take a look at how a fund has done over |
| Banks Banks are great places for some products, | | | | longer periods of time and try to compare it to it |
| but not mutual funds. Banks, too, love selling funds | | | | peers or an index that represents the type of |
| of the loaded variety - but rarely offer much | | | | asset class the fund is in. It is not fair to compare |
| variety (only one or two fund families). They, too, | | | | a government bond fund to the NASDAQ. |
| receive commissions. Banks are also known for | | | | Risk Take a look at the standard deviation of a |
| having very limited or incorrect information about | | | | fund. If Fund A did slightly better than Fund B, but |
| the mutual funds they sell. A study by Consumer | | | | took twice as much risk as Fund A, then Fund B |
| Reports concluded that the odds of getting good | | | | would be the better choice. Other measures of |
| advice at the bank about funds was worse than | | | | risk include the Ulcer Index and the worst periods |
| one in six (the sales people weren’t | | | | (ex. 1-month, 3-month, one year). Don't take any |
| even asking the right questions and often gave | | | | risk that you are not comfortable with and never |
| wildly wrong answers). | | | | take What firm serves as the fund's adviser and |
| Stock Brokers and Investment Advisors These | | | | who manages the fund? It might not be a bad |
| two groups are a little trickier. | | | | idea to do some background checking to make |
| Some want to sell you loaded funds for a | | | | sure it is a decent entity. The SEC is the official |
| commission, others collect fees for advice while | | | | watchdog for mutual funds and has information |
| selling no-load funds and others charge a | | | | about each fund and it's manager. Also look out |
| percentage of assets under management. | | | | for recent manager changes. |
| Generally these companies are good for advice, | | | | Though a new fund manager may be just as |
| but if you are a do-it-yourselfer the next two | | | | good or better, it is important to realize that all |
| choices are much better for you. | | | | the fund statistics from before may not be |
| Discount Stock Brokers This is a great way to | | | | relevant, especially in an actively managed fund. |
| purchase mutual funds. Many discount brokers will | | | | |