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You are here: Stocks Investing Guide >
Mutual Funds |
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Investing Your Money: How to Invest in Different Types of Mutual Funds
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Investing your money in mutual funds can be a better long term investment strategy than stocks alone. The below mutual fund articles will discuss the many types of mutual funds such as socially responsible, sector, value, growth and large cap.
Also learn about the mutual fund comparison tools like share indexes, charts and classes.
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Mutual Fund Investing Articles and Information
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Mutual Funds
Mutual funds are a conglomeration of
stocks, bonds, securities and even real estate, put together
by a smart fund manager who hand-picks winners for a winning
combination. Individual investments are chosen by mutual
fund managers, typically successful stock pickers who have
been chosen to lead and to define the constituents of a
particular mutual fund.
Mutual Fund Share Classes
Mutual funds tend to be
grouped into defined classes, called A, B and C. Some
brokerages have created their own fund classes, also
identified by letters of the alphabet such as X, Y and Z
classes.
Mutual Fund Comparison
There are so many mutual
funds out there that it may seem impossible to sort through
them all. The good news is, you don't have to! Once you know
that you're looking for a no-load fund, most of your work is
done.
Mutual Funds in America
The first investment
trust (now called mutual fund) began in the Netherlands in
the early 1800s. The first in the U.S. was the New York
Stock Trust, which started in 1889. Since Boston was the
economic center of the nation until the turn of the century,
the majority of funds started there—Fidelity, Pioneer and
Putnum Fund, to name a few.
Dollar Cost Averaging
One of the best ways to
invest in stocks or a mutual fund is called "dollar cost
averaging" (or "DCA), because you don't have to buy a
hundred shares at a time, or even five; you buy what you can
afford each time.
Choosing a Mutual Fund
There are mutual funds all
over the place—over 6,000 of them. Some are bad, many are
good; a few are terrific. The fact is that some are
consistently better than others, but it's more likely that
your fund will have a good year, then one that's less than
stellar. Probably the best way to choose a fund is to look
for one that's been around while and that has a good track
record.
When Your Mutual Fund Displeases You
If you're
thinking of dumping your current fund, you can also look at
your mutual fund in relation to the stock market index that
represents it. If you have a large-cap fund, look at the
percentage returns on the Dow or the S&P 500 to see if your
fund is much out of line.
Value Stocks (Boring) and Growth (Scary)
One
definition of value stocks is that their P/E (price to
earning) ratios are below the average for other companies of
that type. That makes the stock a "good buy" because,
theoretically, the stock is actually worth the average, but
currently costs less than it should assuming the company has
the average book value.
Growth Stocks
"Growth" or even "aggressive
growth" is riskier than value. The stock's price to earning
ratio is higher than average, and it's considered a hot pick
because more people want it and expect it to do very well.
Large, Medium, Small and Micro-Cap Funds
Some
mutual fund companies have funds based on the market cap of
the companies that make them up. If you're looking to get in
on the next big thing, micro-cap funds may be your pleasure
because they are made up of companies whose capitalization
has not reached $100 million.
Sector Funds
Sector funds are invested in a
particular industry, and that's what makes them more
volatile than more diversified funds. If you like some risk
and have the money to lose, you might double your investment
in a year and lose it all the next year.
Index Funds
Index funds are mutual funds that are
based on investing in the companies that make up a
particular stock market index; the Dow Jones, the AMEX or
the NSADAQ for example.
Other Mutual Funds
There's a fund for everyone,
and we'll briefly cover some of them under this section.
Mutual
Funds and Toll Free Numbers
Get all the Mutual
fund companies with their respective toll free numbers.
Conservative Mutual Funds
Conservative mutual funds will pay 5-8% interest annually, in exchange for greater investor security.
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Stocks & Investing Advice
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How to stick to a household budget
and have extra
money for investing
1. Customize your budget with your current needs, wants and future goals in mind.
2. Try to think if your budgeting plan as a "spending" plan rather than penny pitching.
3. Sit down and rationally discuss budget goals and spending limits with your spouse. You are bound to disagree somethere, but it important to take the time to find common ground.
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