| If you are new to investing, you may have
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| | then you should consider a mutual fund
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| heard of mutual funds but do not know
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| | that consists of low risk equities and
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| exactly what they are or how to select
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| | conservative bond and money market
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| the right one. A mutual fund is a
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| | instruments. If you want a mix of
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| collective investment security, and there
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| | investments, then you should look for a
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| are many different types. It may
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| | balanced fund. If you want explosive
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| consist of a mix of several different
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| | capital appreciation, then you should
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| types of investment vehicles, such as
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| | consider a high-risk common stock or
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| stocks, bonds, or derivatives, or it may
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| | high-yielding bond fund.
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| consist of nothing but stocks that are
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| | They are different than stocks when it
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| part of a certain sector of the economy,
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| | comes to fees and expenses. As with
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| or it could be just bonds.
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| | stocks, funds are subject to capital
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| For example, there are mutual funds that
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| | gains taxes. But a fund is sometimes
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| consist of nothing but technology stocks.
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| | subject to a front-end and/or back-end
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| There are also funds that are comprised
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| | load. If there is a front-end load, that
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| of stocks that have a similar market
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| | means that a percentage of the initial
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| capitalization (such as mid-cap funds,
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| | investment is automatically deducted to
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| large-cap funds, or small-cap funds).
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| | pay for commissions to the fund. If
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| And some might contain several different
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| | there is a back-end load, the investor
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| types of securities (such as stocks,
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| | must pay a fee when the security is sold.
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| bonds, etc.) that all fall within the
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| | Also, there is a 12b-1 fee that is often
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| same risk classification (high-risk,
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| | deducted to pay for advertising expenses
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| medium-risk, low-risk).
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| | incurred for the marketing of the fund to
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| Just like stocks, mutual funds have a
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| | the public. Sometimes there is no 12b-1
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| price per share, also known as the Net
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| | fee, it depends. Investors might be
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| Asset Value (NAV). The NAV is calculated
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| | unaware of the 12b-1 fee because it is
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| by dividing the total value of the fund
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| | sometimes deducted from the share price,
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| divided by the number of shares
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| | so in a way, it is an invisible fee.
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| outstanding. As with stocks, the price
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| | I hope this introduction to mutual funds
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| fluctuates on a daily basis and it can be
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| | will help you make some decisions
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| sold just like any other security.
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| | regarding your investments. There are
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| When deciding what fund to invest in, you
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| | literally thousands of different funds
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| need to consider your investment goals.
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| | available, and brokerage houses often
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| Are you looking for long-term capital
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| | have their own set of funds that they
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| appreciation, or would you prefer to
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| | create for sale to their customers. Talk
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| receive immediate income from your
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| | to your broker and see if he or she can
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| investment? You also need to evaluate
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| | help you identify the best investment
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| your risk tolerance. Are you willing to
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| | vehicle for you. Just make sure you
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| take a chance on a speculative fund to
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| | review the fee structure of the mutual
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| potentially receive a better return, or
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| | fund you are interested in before you
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| is capital preservation a high priority?
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| | invest.
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| If capital preservation is your goal,
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