basics of mutual funds - 3 MsFiscallyFit.com - mutual funds and mutual fund investing basics for women investors and beginners

Ms Fiscally Fit
Helping Today’s Woman Plan for Tomorrow

Mutual Funds by MsFiscallyFit

Home   Investing   Mutual Funds   Career   My Own Biz    Your Money   Shop  

Mutual Funds
From Getting Started Through Actively Investing

a_ArrowLine_2

The Basics of Mutual Funds - Part 3
Researching Made Easy

Today researching mutual funds is simple, easy and convenient. There are many print and online publications available and many brokerage services, like Charles Schwab, that even have their own mutual fund analysis section. If you already have an account set up with a brokerage company that offers their own analysis, you may want to use their service purely for convenience. Many times from a single section online you can conveniently research fund features, request information from the fund and purchase a mutual fund in the comfort of your own home. It's the ultimate in one-stop shop. If you do not have an account that offers mutual fund analysis, do not despair, there are plenty of places both online and in print where you can get everything you need to make an intelligent investment decision. One of MsFiscallyFit's favorite is an online service called Quicken.com. Quicken.com is an online investment research service. With Quicken.com, you can quickly and efficiently filter through hundreds of mutual funds to find the ones that meet your specific investment criteria, such as low minimum initial investment amount or a certain level of return. (click here for Quicken.com link) Another great mutual fund publication is Morningstar. Morningstar, Inc. is an independent research firm that evaluates and rates a host of different mutual funds. This publication is readily available at your local library (available at the reference desk), by subscription or online at www.morningstar.com. Periodically, the popular financial publications such as Business Week, Barron's, Money and Kiplinger offer special issues dedicated to evaluating the best mutual funds of the year.

Once you have narrowed your selection down, you will need to evaluate each fund's specific features. You can either obtain the necessary information from the various mutual fund research publications, your brokerage account or you can order the fund's prospectus. Each fund is required to disclose to the public specific information that is made available through the prospectus. A prospectus is available free to any interested party by ordering it through your broker or calling the mutual fund's toll-free 800-line. It is also helpful to order a copy of the fund's annual or semiannual shareholder report. The shareholder's report lists the actual stocks currently held by the fund. The make-up of the mutual funds portfolio is not as important for an S & P 500 Index Fund (always invests in the same 500 companies), but becomes more important when you evaluate other types of funds.

As recommended in Part 2 – How to Evaluate and Select the Right Index Fund for You, take a look at the other types of funds offered in the same family. Do you see other funds you might be interested in investing in the future? For example, Vanguard offers a wide variety of other funds, everything from conservative utility funds to high-flying technology funds. If you like what you see, move on to the next step. What is the initial minimum investment requirement? Is it within your budget? On one side of the scale is the Vanguard 500 Index Portfolio Fund which requires a minimum of $3,000 for regular accounts and $1,000 for IRA accounts to the Munder Index 500 K that does not have any minimum requirement. Choose the one that fits comfortably into your budget. Remember setting aside money to invest should be a stretch, but you shouldn't forgo paying rent this month. Believe me if you invest wisely, a little can go a long way! Next check out the fund's operating expenses. Low operating expenses are one of the key benefits to S & P 500 Index funds. The average U.S. stock fund has an operating expense ratio of 1.3%. On the other hand, S & P 500 Index funds are around 0.2%. The lower expense costs help increase your overall return. Make sure the index fund you select has a low expense ratio. Also look out for account maintenance fees attached to accounts that do not meet a minimum balance. Vanguard assesses an annual $10 account maintenance fee on their index funds for all account balances under $10,000. That may not be a lot, but MsFiscallyFit says, "Every penny counts when you are on your way to becoming a millionaire". Look for the account maintenance fee in "very small" print on the mutual fund's prospectus. Most index funds do not carry a sales charge at time of purchase, these are commonly known as "sales loads", but just double check and make sure there isn't one. Although probably not an issue, just make sure the average annual return of the funds you are looking at closely reflect the average return of the S & P 500. There should only be a tiny difference. Other things to look for are convenient account services like automatic direct deposit, retirement accounts and check writing capabilities. These services are not important in relation to the fund's annual return, but can be a nice added feature to take advantage of.

If all systems are go, you are ready to buy the mutual fund of your choice. You can either purchase the fund directly from the mutual fund by calling the toll-free number and requesting the investment package, filling it out and sending a check for the amount of your initial investment. You can purchase the fund from your broker, either by dropping by their offices, calling on the phone or purchasing the fund online. Please note, when you buy the mutual fund from your stockbroker you may be charged a commission on top of any sales load (if applicable).

After you have made you first mutual fund investment, consider adding more money each year or even each month (use the fund's automatic direct deposit feature), because every little bit counts on your way to a solid financial future.

Back To Part 1
Back To Part 2

 

Note: Past results is no indication of future performance. This information is provided to you as a starting point to BEGIN your research and is not to be construed as an offer to sell or a solicitation of an offer to buy. The information presented in this article represents MsFiscallyFit.com's feelings and opinions about a particular stock or mutual fund on the specified date and is not meant to be a specific trading recommendation. Stocks and sector mutual funds tend to be riskier and more volatile and should be considered by investors that have long term investment timeframes, a tolerance for risk and are willing to accept unplanned volatility. Our opinions are based on sources believed to be reliable and written in good faith, but no representation or warranty, expressed or implied, is made as to their accuracy, completeness or correctness or the results obtained by individuals using such information. Readers are urged to consult with their own financial advisors before any investment decision is made and all information contained in this information should be independently verified with other sources. Partners, employees and affiliates of MsFiscallyFit.com may or may not hold positions in any of the stocks or mutual funds included in this information. MsFiscallyFit.com does not receive any compensation of any kind from the companies that we express opinions about. As always, each reader is responsible for the risks and consequences of their own investment activities and in no event, shall MsFiscallyFit.com or its employees, partners or affiliates be liable for any damages, direct or indirect, that may result from the use of this information.
 

Back To Mutual Funds Home Page
 

E-mail suggestions and comments to:
 infomaster@msfiscallyfit.com

All Content Copyrighted by MsFiscallyFit.com unless otherwise noted
© Copyright 1999 - 2007 MsFiscallyFit.com All Rights Reserved

 

Sign Up for
Ms Fiscally Fit’s Newsletter
and we’ll put you in a drawing for an incredible bonus of
3 Day 2 Night Getaway

 

This is not a timeshare.
There are no presentations to attend

ShareBuilder - Welcome page