How to Choose a Stock Mutual Fund
I wrote an article entitled, “How to Choose a Stock Mutual Fund,” that’s been posted here. It details the factors you need to consider when choosing a mutual fund. Give it a read and tell me what you think.
Here are the highlights:
- Invest the bulk of your investment funds in index funds, most likely an S&P 500 index fund
- Choose no load, low fee mutual funds
- Dollar-cost average
- Invest in funds that have low initial and subsequent investment so that you put your money to work sooner rather than later
- Most importantly, with actively-managed funds, choose superior fund managers
Mutual funds are great ways to get quick diversification along with exposure into stocks. Now may be a really good time to invest in the stock market, since prices are very low. The last 8 years have not been good to this market. But the stock market has fared better than the housing market, that’s for sure.
And over time, the stock market (think S&P 500) has returned over 10 percent per year (dividends included).