If you are interested in adding to your investment portfolio, you will need to buy mutual funds. There are several different ways to do so. You can buy mutual funds by contacting the fund directly. Other mutual fund shares are sold mainly through brokers, banks, financial planners, or insurance agents.
Make sure you understand the 3 main parts of buying:
Mutual Fund Dividend
Mutual Fund Prices
Mutual Fund Store
With over 10,000 mutual funds to choose from, where do you begin? Compare a fund's performance to an established benchmark, like the S&P 500. Some companies like Morningstar (morningstar.com) rate mutual funds against others in their own class.
The Motley Fool recommends that you buy mutual funds with these criteria:
1. No sales charges (front loads, contingent deferred sales loads, level loads)
2. A low expense ratio (below 1.00%)
3. Low turnover, no higher than 50% a year, and preferably closer to 20%
4. Full investment policy. Cash reserves of nearly 0%.
The price that investors pay for mutual fund shares is the funds per share net asset value (NAV) plus any shareholder fees that the fund imposes at the time of purchase (such as sales loads). Buy mutual funds through a financial adviser (you may have to pay a one-time fee) or the fund families itself, or use an online store or broker.
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