Posts Tagged ‘Investors’

A Short Guide on Selecting the Right Mutual Funds for Yourself

Wednesday, August 15th, 2012

Mutual funds are fast emerging as favorite investment avenues for millions of small and big investors all over the world. This large scale popularity is mostly due to the reason that mutual funds on an average have 3 to 4 dozen stocks in a single portfolio. Therefore, risks are significantly cushioned due to such large scale diversification. Below you’ll find a short guide on selecting the right mutual funds for yourself:

1. Understand your own investment objective first of all. A mutual fund should be chosen according to your unique needs. You need to know whether you’re looking to invest in capital growth or a retirement plan! Having a clear idea of your personal needs can help you to make an informed investment decision.

2. Draw an expected time frame for both investment and returns. It is very important to be consciously aware of this time frame when selecting a mutual fund. If you prefer to get returns over the short term, you need not invest in equity funds, for example. For short term returns, an investor should study available floating rate funds or money market funds instead.

3. Once you have finalized the right kind of mutual fund investment plan and timeframe for yourself, it is time to look out for various sources that have such plans on offer. Get in touch with financial advisors to gather this information quickly. You can also rely on financial blogs and investment comparison websites for such information to some degree.

4. Use mutual fund indices to select companies that have been performing well over the last couple of years. You can rely on some of the most standardized industry indices such as S&P fund index, Nasdaq 100 and Russel 2000.

5. Once you’re done short listing companies and plans, you need to get a clear idea of various taxes, fees etc. involved. Directly ask representatives of a company to explain the effect of additional fees and taxes on your overall returns.

6. The best investment is the one that involves least amount of risk. In order to find out whether a plan under consideration is safe or not, you can inquire about its Sharpe Ratio. This number is a good indicator of riskiness of a fund.

7. If you want to build a big asset over a long period of time, you may want to choose a plan that allows you to make smaller contributions in the beginning.

Mutual Funds Buying and Selling Guide

Sunday, January 3rd, 2010

Investors who are either starting out or who have little money to invest can actually take advantage of the expected growth opportunities that billionaires like Warren Buffett see on the horizon. The way to participate in this? Mutual funds. Mutual funds make an excellent way of investment because you have to make just one purchase and you can easily acquire a wide range of investments. They offer an array of benefits and features. It is very easy to buy these funds and it is much easier to sell the same. However, in order to decide about the best funds suitable to you, you will have to do some research and homework. Following is a brief rundown on how to go about it.

Know the basics
Before you go ahead and start investing, you are strongly recommended to first learn the basics of what mutual funds are and how they work. These funds basically refer to a portfolio that can include different types of securities, such as certificates of deposit, bonds, stocks, and others. The majority of these funds have a certain focus.

Investment goals
In order to get the best return out of your investment, you must also be well aware of your financial goals. The goals must be specific. If you know the objectives you want to achieve, it will be very easy for you to decide about the right kind of mutual funds that are most suitable to you. You may like to ask certain questions to yourself. For example, do you want money to purchase a vacation home? Are you planning for retirement and you need money to fund the same? Do you have to pay for your college education? The answers to these specific questions will help you make an accurate decision.

Your overall portfolio
The next thing that you have to do is to look into your overall portfolio and determine how investment in these funds is going to fit there. The basic investment strategy is same here – you don’t have to invest all your money; make sure you have sufficient money available every time not only to meet your regular expenses but also the emergency ones. Find out the exact percentage of your overall assets that you can afford to invest in mutual funds.

You will also have to determine the amount of risk that you can afford. If you don’t want to go for the risky ventures, you should never invest in aggressive funds. If you do, you will most probably end up having a string of sleepless nights. When it comes to buying and selling of mutual funds, you must also do a thorough research of the market. It will be a nice idea to go through various financial magazines where you can check out the list of these funds rated on the basis of several parameters, such as risk, performance, and others.