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Finance For Dummies

Finance For Dummies offers personal finance information on investing, retirement investing, finance, insurance, credit cards, loans and more. Personal finance education is our goal.

Monday, April 24, 2006

Investing

Once you have a safety net of cash as a back up and have maxed out your 401k and IRA then you can focus on investing for profit and short/long term growth. The safest way to go with this is to focus on mutual funds. If you do not have the knowledge or time mutual funds do the work for you. My recommendation is to avoid brokers at all costs because they are not looking out for your best interest--they are trying to make money for themselves.

Rule: Never invest in a mutual fund that has a front or back load!


Do not be intimidated by doing the investing yourself. This is your life and your money. Is it worth paying up to 5-6% of your investment in a load just so the broker picks a mutual fund for you? No way!

If you are investing $10,000 in a mutual fund through a broker do not be surprise if there is a 5% front load. This means you have invested $9,500 instead of the $10,000 you could have if you did it yourself. Go to a computer, ask friends, get some information on mutual funds you would like to invest in and call that mutual fund directly and invest directly through them. You will be more satisfied because you did it yourself. Paying a load in no way means you are getting a better mutual fund. It means that brokerage firm has a deal with certain mutual fund companies to sell their mutual funds. The load is part of that deal. No one is looking out for you here. Invest on your own. I would rather have a fund go down that I picked than one that a broker did (and paid 5%).

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