How to Invest in Mutual Funds

If you do not have the time devote to an active stock investment, but would still like to take advantage of the portfolio diversification benefits of owning stocks, then investment in mutual funds is the vehicle for you.

Below is a how-to-guide for investment in mutual funds. Evaluate your list according to the following: accessibility, customer service, exit strategies, rate of return, and management integrity.
1. Shop around. Ask your bank if they have mutual funds products. Whether they do or
don’t, ask for recommendations. Your bank knows a lot of other banks and
financial institutions which offer the same product.

2. Compare and contrast the choices. Analyze the relative performance of the banks
and mutual funds companies in your list. The following can be used as criteria.
• Accessibility of their product – how much is the minimum investment
requirement? How much is the minimum additional funds to the account?
• Levels of customer service – how fast do client concerns are addressed? Is
there a team dedicated to answering investment questions? Do they provide
investment advice to small investors?
• Exit options – what are the restrictions for fund withdrawals? How much are
the charges? Can funds be withdrawn anytime?
• Rate of return – what s the historical rate of return to-date? Last year? 2
years? 5 years? Are the returns consistent with or above the industry?
• Integrity of managers – are the fund managers trustworthy? Is the investment
composition of the fund aligned with its objectives and conditions?

First, eliminate the mutual funds that have very high initial investment requirement. Say Mutual Fund X has an initial investment requirement of $100,000 while you only plan to make an initial investment of $1,000. Second, you would want to be in a company that you can afford, but still feel valued no matter what your net worth is – after all, this is an investment in mutual funds not private banking. Then, your next criterion is whether the fund allows you to take out your money anytime. No matter how accessible the fund is and how accommodating the staff is, if you can not withdraw your money when you need it, then it is not a good choice.
After paring down your choices to the most accessible friendly funds, then you have to evaluate the rates of return. Choose the funds that will give you most value given your preferences. After which, check management integrity – although a fund may report a high return, if its management team is less than exemplary, then its reported return is suspect.

Mutual Fund Investing with Style

When deciding to invest in a mutual fund (or any other investment), it is generally accepted that a diversified portfolio reduces risk over the long term. The readers would have also come across findings and assertions along the lines that stocks do better than bonds over the long term, small cap stocks can be more rewarding than large cap stocks, junk bonds are riskier than treasuries, etc. What do all these terms mean? In this article, we will review the concept of a mutual fund style that can help visually illustrate these concepts and aid in developing a diversification strategy.

There are two basic style that we need to understand. One is for the stocks and the other is for the bonds. The key attributes that a stock stylebox reflects is the size of the stocks (in the fund) and the valuation of the stocks (in the fund). The bond (or fixed income) stylebox on the other hand reflects the credit quality of the bond and the duration of the bond (maturity).

Here are The Top 10 Reasons for Mutual Funds

1. Selection. You can select from thousands of funds to suit your needs and you can get information on them easily. Most credit unions have information, and your local library is a goldmine? The Internet…

2. You Can Start Small. Most mutual funds will let you start with less than RM1000, and if you set it up for automatic deposits, some helps in saving of RM100 monthly I’ve spent more than that in a restaurant! There is NO reason not to consider this!

3. Simplicity. You deposit 10% of your income every month. Just pay yourself first, then pay the mortgage, then pay everyone else.

4. Professional management. I don’t always have time to research, select, and monitor individual stocks. So, I pay a professional a small fee to do it for me. A good fund manager will make you rich!

5. Compound interest. Depending on what index you pick, the Malaysian stock market showing good improvement and growing for the past 10 years. The market fluxuates (volatile) but the beauty of this is, you don’t care! Over 10, 20, or 30 years, the system works every time!

6. Dollar-cost-averaging. The details are complicated, but by investing every single month, whether the market is up or down, you get a tremendous boost from the mathematics. Your average cost will always be less than the average price you paid! And that is money in your pocket!

7. Diversification. A broad-based growth fund typically invests in dozens of companies in different industries, sometimes even in different countries around the world. If one stock goes down, hopefully dozens of others will go up. There is excellent protection and sound risk management built-in to these funds.

8. Specialization. If you prefer, and if you do the research, there are funds that invest in only a very small number of companies. If you can accept the additional risk, you can invest in one particular industry, or one country, or in companies of a certain size or that are environmentally responsible. This specialization offers the potential for even greater profits, but it can also bring greater potential risk. Study before you invest!

9. Fund Families. Most mutual funds are offered by management companies that sponsor several different funds, with different objectives. They make it easy to move your money between funds, so as your goals change, you can adjust your investments with a quick phone call, or on the Internet.

10. Momentum. Once you get started, your enthusiasm builds. Once you have money in the market, you’ll track it, manage it, and in all probability, your desire to save will increase. If you’ve had difficulty saving in the past; START! Those monthly statements will be positive reminders to do even more. Yes, you should invest in tax-sheltered retirement plans first, and yes, there are other investment possibilities. And yes, there is some risk, because the market can go down. But to retire wealthy, pick a great, long-term growth fund, invest regularly, and let the system work for you!

The key, as always is: GET STARTED!

Mutual Fund Investing with Style

When deciding to invest in a mutual fund (or any other investment), it is generally accepted that a diversified portfolio reduces risk over the long term. The readers would have also come across findings and assertions along the lines that stocks do better than bonds over the long term, small cap stocks can be more rewarding than large cap stocks, junk bonds are riskier than treasuries, etc. What do all these terms mean? In this article, we will review the concept of a mutual fund style that can help visually illustrate these concepts and aid in developing a diversification strategy.

There are two basic style that we need to understand. One is for the stocks or Equity and the other is for the bonds. The key attributes that a stock stylebox reflects is the size of the stocks (in the fund) and the valuation of the stocks (in the fund). The bond (or fixed income) stylebox on the other hand reflects the credit quality of the bond and the duration of the bond (maturity).