How To Pick A Mutual Fund

Mutual funds by definition are a mixed bag of stocks, bonds and a little cash. Their price per share is the NAV, Net Asset Value of the total amount of money in the mutual fund divided by the number of shares. They seek to be fully invested at all times.

The fund manager determines which stocks and bonds to buy and sell in order to give the greatest return to his shareholders. He is considered to be an expert in choosing stocks for appreciation of value and should be expected to give a better than average return. That's why he draws down a six-figure income.

You are encouraged to pick a fund that has your goal in mind. Is it considered conservative, speculative, income oriented, growth or some other category? Wouldn't you say one of the principle reasons was to have the greatest return on your money? Do you want an average return or do you want an above average return?

What is average? There is an index which you hear about on the news every day called the S&P500. Because it is composed of 500 different stocks it is broadly representative of the market as a whole and therefore called a market average or index. You certainly would want a fund that is doing better than average.

You are encouraged to read the prospectus. Did you realize that the day it is printed much of the information in it is over a year old? It is written for the regulators in Washington, not for investors. It is worthless. Throw it away.

There are load funds that charge a commission and no-load funds that do not charge commission. There is no proof that paying a commission will provide you with a better return. Buy your no-load funds direct from the fund or through a discount broker.

You are told to find a good fund manager. Various money magazines list them. Investor's Business Daily does a feature story on different fund managers several times each week. Check to see if his fund is outperforming the S&P during the last 12 months. There are very few fund managers who have a consistent record and even the best of them gets cold once in a while and has a losing streak. You want your money returning at maximum at all times so you can't stay with one manager when he is running cold. Change funds.

One of the Wall Street myths is that you should put your money into a "good" fund and let it stay there for years. This is promoted because mutual fund managers are compensated by the amount of money they have in the fund and not for performance of the fund.

So how do you pick a fund? Very simple. It must outperform the S&P500 Index. Any mutual fund manager who cannot beat a market average should not be holding your money. Check out your funds today.

Al Thomas' book, "If It Doesn't Go Up, Don't Buy It!" has helped thousands of people make money and keep their profits with his simple 2-step method. Read the first chapter at http://www.mutualfundmagic.com and discover why he's the man that Wall Street does not want you to know.

Copyright 2005

---

Finding A Good Stock

One of the things people are always asking me is... Read More

Expense Ratios

Mutual funds and brokers are always preaching not to buy... Read More

What Are You Waiting For?

Do you own any mutual funds? In an IRA or... Read More

Emotional Trading

The single most expensive stock market trades are those made... Read More

Whos Calling?

Its dinnertime and the phone rings. It's Joe Noname with... Read More

Online Investing & Stock & Share Trading: 4 Reasons Why Most Online Investors & Traders Go Broke

Are you attracted to the idea of being in control... Read More

Dont Lose All Your Money

That sounds like good advice doesn't it? Don't lose all... Read More

Political Investing

We have two candidates for president that have really different... Read More

How Eating Bitumen Made Me a Better Trader

Trading is a fascinating activity.There are so many layers to... Read More

Good News?

As the man said, "I've got some good news and... Read More

Oil Stocks As A Long Term Investment

The demand for world oil is increasing while world reserves... Read More

Stock Loans

Hedge current portfolio positions and gain access to capital resources... Read More

Different Types of Mutual Funds

This is a guide to the different types of mutual... Read More

Market Psychology

Today we are inundated with tons of information about the... Read More

Leverage - Margin Debt

What is leverage?Here is a definition of leverage from an... Read More

The Importance of Using Stop Loss Orders When Spread Trading the Financial Markets

A Guide to Using Stop Loss Orders Stop losses are... Read More

Maximizing a Stock Market Investment

Maximizing a stock market investmentThere are several factors an investor... Read More

Ignore Stock Market Talking Heads

You should ignore analysts on TV, the radio, the newspaper... Read More

9 Deadly Trading Mistakes!

The following are a list of nine things you want... Read More

No Load Mutual Funds: Investment Hype vs. Investment Help

With the internet such a huge part of our daily... Read More

Selling Strategies - Setting a Stop Loss

Sometimes the best way of lowering exposure to risk is... Read More

Chart Reading

As an investor you will want to check out any... Read More

Intervention

Intervention. Now don't let that big word scare you. The... Read More

Trading Tips No 6: The High Cost of Low Cost Stock Market Information

It has been said that low cost or even free... Read More

8 Penny Stocks to Avoid

There are many good penny stock investments available, which could... Read More

The Surgeon General

The Surgeon General of the United States says that smoking... Read More

Why Investors Use Financial Planners

Do you have a financial planner? Does one of your... Read More

Stock Trading Secrets?

How often have you come across an advertisement or e-mail... Read More

Size Counts!

What the heck am I talking about?It is often said... Read More

Shorting Stocks ? The Basics, Part II of II

After the publication of the first part of this two... Read More

Roller Coaster

I love roller coasters. The steeper the better. High and... Read More

Direction

It is difficult to make money in a bull market,... Read More

Your Job

There are so many kinds of work that needs to... Read More