Heike Moeller February 24, 2020 Mutual Fund
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.
In developing mutual fund strategies it is important to recognize that most software programs, especially chart based programs, are designed to work best with stocks or ETFs. The holding requirements, short-term trading fees and round-trip penalties of most mutual funds companies require different software programs.
SEC Chairman Arthur levitt, Jr. warned of growing unfairness in the relationship between individual investors and mutual funds in January 2001. Mr. Levitt made the following comment: "THERE ARE A NUMBER OF INSTANCES THAT, QUITE FRANKLY, DO NOT HONOR AN INVESTOR`S RIGHTS. INSTANCES WHERE...HIDDEN COSTS HURT AN INVESTORS BOTTOM LINE, WHERE SPIN AND HYPE MAKSE THE TRUE PERFORMANCE OF A MUTUAL FUND, AND WHRE ACCOUNTING TRICKS AND SLEIGHT OF HAND DRESS UP A FUND`S FINANCIAL RESULTS"
To discover additional investment, financial and income tax strategies, check out my blog or download your FREE Wealth Expansion Kit by clicking here. The first step to creating wealth is knowing where you are and then charting a path that will enhance your financial strengths and correct your weaknesses. The ratings of mutual funds are placed on them by the history of the previous performances. By researching the companies that you wish to invest in and charting the mutual funds ratings you can certainly see trends develop in the potentials for both profits and losses in these funds.
Mutual funds also cost less. You do not have to spend a lot of money to purchase them like you may have to with a single stock purchase. Plus, you can invest small amounts at any time with no trading costs. If you have decided to invest in a mutual fund, there is one problem. There are well over 10,000 funds available so which one to go with. Before you actually invest in a mutual fund get a prospectus from the company. The prospectus will tell you about the fund including the funds goals and how the goals will be achieved, along with a chart of past performance and fees.
Sometimes it is just a lot easier to pick fabulous mutual funds, and let professional money managers make the individual stock selections for you. If you go this route, and for many it is the way to go, than I suggest your big decisions are what sectors you want to invest in, and what are your asset allocations. Sounds like fancy language, but really it is not. It is just plain common sense investing. What is your aversion to risk? Do you want to embrace investment risk, or do you seek to encounter as little risk as possible.
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