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An Introduction To Mutual Fund Shopping

Have you postponed selecting mutual funds or replacing the ones you own because you fear making the wrong choices? There are ways to avoid the common pitfalls when you start looking. Here are some tips to keep you on the right path: Don't chase last years hottest funds. Any fund can have a great year, but that doesn't mean that it's a good investment. Even the worst funds can get lucky once and a while. Look for funds that beat the averages for five to ten, or even twenty years. Structure your portfolio to include funds that will balance each other out and generate reasonable returns in both bull and bear markets. Don't get antsy. You may want to consider holding on to funds that are not doing very well if other funds in the same category are also faring poorly. In this case it's probable that external factors (possibly overseas turbulence or interest rates) are depressing the returns. Remember your investment goals. If your saving for retirement in twenty five years it may cost too much in lost growth to put the bulk of your savings into conservative investments that may not keep pace with inflation. However if you are planning to invest for a short period of time you may want to avoid the inherently risky stock funds. Glossary of Mutual Fund Terms. Check out these links for more information on specific funds: http://www.enterprisefunds.com http://www.americanfunds.com http://www.pimco.com Of course, there are risks, such as loss of principal and fluctuating values, involved in investing in any mutual fund. Past results do not guarantee future performance. Investing for shorter periods makes loses more likely. Investments in mutual funds are not FDIC insured, nor are they guaranteed by a bank or any other entity.