| Mutual funds are an excellent financial vehicle for investors seeking Diversification, Professional Management, Liquidity, Convenience, and
Affordability. Many individuals, companies,
pension funds and some governments have selected mutual funds as the way
to invest in today's financial markets. Whether you are a small
investor or a large institutional investor, whether you are a conservative
government bond investor or a high risk one, there is a mutual fund available
suited for just about every investor.
A mutual fund is a pool of stocks or bonds, sometimes both, owned on
a proportionate basis by everyone who has invested in the fund. All investment
gains as well as fund expenses are shared proportionately by the fund
owners, called shareholders.
It is easy to invest in a mutual fund. Many mutual funds require a $1,000
initial investment to get started. The amount to be invested can be remitted
by check or wire transfer, as a means of convenience.
Once a mutual fund account is established, each investor receives an
account statement regularly, often quarterly. An investor can add additional
investment sums at anytime, if he so desires. He can also withdraw his
investment or a portion of it easily.
In general, it costs an investor less to invest in a mutual fund pool
of stocks and bonds than if he tried to duplicate that same portfolio
of stocks and bonds individually. All mutual funds, however, have asset
management fees. Some mutual funds impose fees when you invest in them
or redeem your shares. It is important to investigate mutual fund fees
before investing. Read the mutual fund prospectus to find out about the
fees and other provisions of a fund.
It is just as important to assess a fund's investment performance minus
all such fees to determine if a fund has a good track record. An acceptable
net investment performance record (investment return minus all fees) for
a mutual fund should be your investment objective when selecting a fund.
Keep in mind, however, that past performance is not a guarantee of a fund's
future performance. Mutual Fund principal will fluctuate and be worth
more or less than the original investment when redeemed.
Load vs No-Load Funds
Load funds include a sales commission that usually goes to the broker
or other professional who sells the fund. This fee can be paid at time
of purchase, a front-end load, or paid if shares are redeemed during the
first few years of ownership, a back end load, (Contingent Deferred Sales
Charge).
No-Load funds are sold without a sales commission. However, expect to
pay some fee when using a professional adviser to assist you with your
investments. |
