A Mutual Fund is a company that combines, or pools, investors' money and, generally, purchases stocks or bonds. Ideally, a fund's size and resultant efficiency, combined with experienced management, provide advantages for investors that include diversification, expert stock and bond selection, low costs, and convenience. (Mutual, 2001). With a mutual fund, investors pool their money with one common goal and that is to make more. When you invest in a mutual fund, you own share(s) of the fund, which give you certain voting rights. Although, a mutual fund 's investment decisions are made by the portfolio manager, or a team of managers (Rowland, 1997). Make Sure you choose the right manager for youThere are 10 commandments of Mutual Fund Investing ONE: You can lose a bundle if you pick the wrong kind of mutual fund. Read carefully the free literature that mutual fund companies provide on their funds. Always understand what you are investing in. TWO: Don't rush out and buy the first mutual fund that looks good. You first have to identify your investment goals, determine how much you need from your investment and figure out how much you're willing to risk losing THREE: Don't try to make quick profits. Always invest for the long term. You should plan to keep some of your mutual funds an absolute minimum of 5 to 10 years. FOUR: Mix up your investments. You can cut your chances of losing money by putting your money in different types of investments. FIVE: Invest regularly with each paycheck, before you have a chance to spend all your money. Mutual funds have automatic investment programs. Money is electronically taken out of your checking account and invested in the fund. SIX: Do your homework. Once you determined how much money you need and by when, as well as how much you can afford to lose, research the best investments to meet your goals. Most library business sections carry information on mutual funds. SEVEN: Avoid paying high com...
