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how to invest in mutual funds
Bookmarked 626 weeks ago https:wwwyoutubecomwatchv=g5szv218znkhttps:wwwyoutubecomuserstocksnethttp:leesmithinfomutual fund basicsa mutual fund is a portfolio or collection of individual securities some combination of stocks bonds or money market instruments managed according to a specific objective spelled out in the fund039s prospectus with a mutual fund you can pool your money with other investors and then the fund invests it on your behalfunlike individual stocks whose value fluctuates minute by minute mutual funds are priced at the end of each day the market is open based on what the securities in the portfolio are worth the price per share or net asset value nav of a mutual fund is the current market value of the fund039s net assets divided by the number of shares outstanding investors buy and sell shares in the fund based on its nav as of the next market closebenefits of a mutual funddiversificationdiversification is one of the key reasons for investing in mutual funds most investors are concerned about the risks associated with financial marketsnamely that their investments will lose money or will not grow enough over time to outpace inflation and meet their future financial needs while the risks of the stock market cannot be eliminated there are various strategies used to reduce the level of risk one such strategy is diversificationwith a single investment in a stock or bond you can essentially have all of your eggs in one basket by contrast you gain exposure to dozens of securities in a mutual fund investment thereby spreading your risk across securities assuming your mutual fund039s portfolio is itself properly diversified the fund039s value should not fluctuate as widely as the price of an individual stockinvesting in several mutual funds with different investment objectives can result in even broader diversification mutual funds with only a few stocks in its portfolio or that focus solely on particular sectors ie technology or healthcare are considered non-diversified you would have to invest in several non-diversified funds to achieve diversification and reduce certain risksprofessional managementmutual funds are managed by investment professionals who have the knowledge and expertise to buy and sell securities that fit the investment objectives of the fund most fund managers have extensive educational and professional credentials and years of experience managing moneysimplificationfor an individual investor buying and selling individual stocks or bonds can be complicated requiring extensive knowledge of financial markets expensive because of brokerage costs and time consuming mutual funds greatly simplify the investment process by providing you a ready-made professionally managed portfolio at a reasonable cost mutual fund shares can also be readily bought and sold at a price calculated daily known as the net asset value per share nav some mutual funds charge a quotloadquot or sales charge to invest a quotfront end loadquot or sell your shares quotback end loadquotall domini funds offer both quotloadquot and quotno-loadquot shares each fund039s quotinvestor sharesquot are quotno-loadquot meaning that there is no fee charged to invest in the fund or to sell your shares although the domini funds039 investor shares are no-load certain fees and expenses apply to a continued investment as described in the funds039 current prospectusasset allocationinvestors can allocate their money among three major asset classes -- stocks bonds and cash -- and numerous subcategories within those asset classesasset allocation is important because it determines how risky an overall portfolio is if all of a portfolio039s assets are concentrated in one area such as stocks it is likely to be more risky than a portfolio whose assets are spread out among diverse investment categoriesan asset allocation appropriate to an investor039s goals and time horizon provides the best chance that an investor will meet his or her financial goals in addition an investor should examine his or her overall financial resources and personal ability to tolerate risk when making asset allocation decisionsinvestment goals and time horizonspeople invest for a variety of reasons some want to buy a new car next year others are saving for a down payment on a house that they plan to buy three years from now college tuition looms on the horizon for many families and of course there is retirement which is the biggest investment goal for most individuals from: wwwdominicominvestor-educationmutual-fund-basicsbest mutual funds how to invest in mutual funds ira 401k |
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