How To Pick A Mutual Fund
Given the range available it could be a challenge to pick a Mutual Fund to invest in. Not just for a novice but even for experienced investors, it is not an easy decision putting money into Mutual Funds. Although to a layman who do not understand stocks as much or who do not want to get into the risk mode that is generally associated with dealing in stocks, Picking a Mutual Funds could be an easy way out. Mutual Funds is something like making someone else deal in stocks and make profit for you. But of course not every fund manager is worth his or her salt.
Therefore it is very important that you do an initial research before picking any Mutual Fund. One of the most important exercises before actually buying a Mutual Fund is to realize what kind of return you are expecting in what kind of time frame. Once you have decided about your minimum expectations, you can start looking at the fund directories. Funds are generally of two types - open ended and close ended Funds. Open ended funds are those where investors can buy units at any time after the Fund has been launched. Close ended funds are those which can not issue any units after their launch except for in the form of bonuses. Also, investors can chose growth or dividend options in the Mutual fund they buy. In case of growth whenever a dividend is declared by the Fund, it invested back in the form of units of equivalent value whereas in case of dividend, the amount is paid out to the investor.
Mutual Funds are generally star rated by many reputed agencies. The ratings are generally done on funds' past performances. An investor should keep track of the entry and exit load for any fund. This can vary from say 0.25 percent to up to 2.5 percent of the capital value invested in the fund. Another general parameter that can be applied to a mutual fund is their fifty two week low price. It is generally advisable to buy funds near their lower values. Other than that it is important to see what kind of stocks have a fund invested in, what is their philosophy and how have been their growth rate and past performance.
Although not as much attention is warranted by Mutual Funds as is by stocks but it is nonetheless imperative that you are aware of the performance of the Funds that you have invested in.
Therefore it is very important that you do an initial research before picking any Mutual Fund. One of the most important exercises before actually buying a Mutual Fund is to realize what kind of return you are expecting in what kind of time frame. Once you have decided about your minimum expectations, you can start looking at the fund directories. Funds are generally of two types - open ended and close ended Funds. Open ended funds are those where investors can buy units at any time after the Fund has been launched. Close ended funds are those which can not issue any units after their launch except for in the form of bonuses. Also, investors can chose growth or dividend options in the Mutual fund they buy. In case of growth whenever a dividend is declared by the Fund, it invested back in the form of units of equivalent value whereas in case of dividend, the amount is paid out to the investor.
Mutual Funds are generally star rated by many reputed agencies. The ratings are generally done on funds' past performances. An investor should keep track of the entry and exit load for any fund. This can vary from say 0.25 percent to up to 2.5 percent of the capital value invested in the fund. Another general parameter that can be applied to a mutual fund is their fifty two week low price. It is generally advisable to buy funds near their lower values. Other than that it is important to see what kind of stocks have a fund invested in, what is their philosophy and how have been their growth rate and past performance.
Although not as much attention is warranted by Mutual Funds as is by stocks but it is nonetheless imperative that you are aware of the performance of the Funds that you have invested in.
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posted by burf at 10/28/2009 08:16:00 PM
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