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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.

Thursday, September 28, 2006

Large Mutual Fund Companies

Mutual funds are as popular as ever for most investors and they are a great way to have your money professionally managed and diversified. If you are investing in mutual funds I recommend that you do everything on your own. Doing the research is easy. Decide what type of fund you need and then go on to one of the many websites (Yahoo Finance, Smartmoney.com) that will screen out the funds you do not want. Focus on 5-10 year performance and statistics (ignore short-term results). Choose one that fits your criteria and then call them directly. Ask them questions you have about the fund and invest directly through the mutual fund--it will save you money on fees, however, you will have more paperwork. Remember to never buy a mutual fund that has a front or back load (sales charge), there are too many good mutual funds available that are no loads.

Typically I would not recommend large mutual fund companies like Vanguard, T. Rowe Price, etc., but these funds do have their place. Because they are so large they can offer the novice investor more investment options that fit a specific criteria as well as lower expense ratio. Sometimes you might be able to get enough funds from one company to have a diversified portfolio. If you invest enough in any kind of mutual fund you might be elligible for breakpoints. Sometimes that is much easier to do if you are invested in one fund family.

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