Brigitte Werfel February 4, 2020 Mutual Fund
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Investing in mutual funds online are always subject fees and this can be a tricky subject. Brokers charge fees and these can widely differ depending on the broker you choose to go with. Always read the fine print with anything dealing with money exchanging hands. There could be hidden fees or fees for changing funds that are within the same fund family. Some brokers do not charge any fees and these may be the ones you should look into.
For instance Morningstar gives one to five stars as ratings. The score the company first gets on the risk of the fund is what the system is based on. The performance of the fund for the previous five years is then taken away from the original rating. The reliability of this system is not very good as the performance is based on past numbers and can not accurately predict the future earnings or losses on these funds.
The trading strategy for each group will be different. One group may only require a "minimum hold" of 30 days while another may require 90 days. A `dividend` group may result in very infrequent trades while a `sector` group may trade more frequently because of changes in the economy and offer opportunities for large gains, large profits. You may, as I have, have two or even three different strategies for the same group of funds, one based on more frequent trading then the other.
Before you invest in a fund, look at the fees the company charges. You will notice these fees in the prospectus. If you are ambitious, you will be able to find the fee structure online. Always go with a fund that has a low expense ratio and stay away from 12b-fees. When buying mutual funds you will have various types of choose from. There are money market funds, municipal bond funds, corporate bond funds, mortgage-backed securities funds, U.S. Government bond funds, stock funds, and index funds.
There are, in effect, FIVE separate bills that mutual funds charge. The best way to determine if something is effective for you or not is to dollarize the benefit or the burden. When you invest in the typical mutual fund (assuming outside of a qualified retirement plan), you face the following costs that erode your benefit and you probably were never aware of them, you will not find them in your prospectus and your broker is not going to sit down and tell you about them.