financial mutual funds for novices
WRITTEN BY Rose M. Anderson, CFP®
WE ALL LIKE CHOICES, but when faced with
United States, and global funds, which are
more than 8,000i mutual funds, taking a dart to
worldwide. Select the fund with the objective that
the newspaper’s financial section can begin to
helps to diversify your portfolio.
seem like a logical selection technique. But wait; there is a better way. Let’s peel back
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hiring managers to do this for you. For myself, I
the layers of mystery and start at the core of
want the most experienced managers I can find,
importance: the objective of the fund. Every fund
preferably with a long track record on the fund in
must state the type of stocks or bonds in which it
which I am interested. And I don’t want to pay
is investing and their concentration. For example,
too much for them.
a U.S. Large Company fund will be searching for
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You do not manage the fund yourself; you are
Every fund has expenses. Every one. Even the
those big companies based in the United States
index funds. If you don’t know what these
with capitalizations over $60 billion. A balanced
expenses are, you could be paying too much for
fund will invest in a blend of perhaps 60 percent
your fund. These expenses are deducted from the
stocks and 40 percent bonds. There are
investment results, which means that in years of
international funds, which invest outside the
low returns, the fund company is reaching into