Sophie Moench February 24, 2020 Mutual Fund
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.
Once you have discovered which index your fund tends to follow it will be obvious on the charts then pick one or two funds that follow the $RUT, one or two that follow the $MID, one or two that follow the EFA foreign funds are usually easy to spot by their names , and finally one or two that follow the NASDAQ.
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.
However, having real property as an investment does not mean you do not manage it. What do I mean? You have to be responsible and manage your equity that your home accrues and if you have investment properties, you have to manage those properties like an investment portfolio with precision planning so that it does not create a negative cash flow because cash is king. In the business world, businesses that fail to manage their cash flow properly often fail to survive. Similarly, where individuals or families fail to manage their cash flows properly they end up in the same place, bankruptcy court.
This essay is to enlighten investors on what they are getting into if they are relying on mutual funds as a way to provide for their financial freedom at the time of retirement. Due to the complexities of following stocks and finding competent money management, unless you are a multi-millionaire, many Americans have turned to the quick fix known as a Mutual Fund.
Keep It Simple In the final analysis, the most important thing you need to analyze when it comes to picking mutual funds is your needs. Look at your overall investment objectives and then make your investments accordingly. This will typically mean deciding what risk levels your comfortable with and then executing. Given historical results, for most of us that may very well mean buying index funds and dealing with matching the markets. No one has drawn up a superior playbook and 11% is not so bad anyway.
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