How to Select A Mutual Fund

Investing in mutual funds is a way to make a surer investment than some other forms. It provides you with a more stable foundation for your investments and can act as a balance to other high-risk type of instruments. Here are some tips on how you can choose a good mutual fund that will bring you the safe returns you want.

Determine Your Investing Goals First

Your investing goals will help you determine just how you should invest. Mutual funds come in different forms, as well as risk levels, so you will need to make a decision about this from the start.

Decide How Much You Have for Fees

Some forms of mutual funds, such as no load funds, have no additional fees associated with them. This also means, though, that you do not get the same level of services with your mutual fund as you would with those that have fees. You have no professional assistance or oversight of your fund, which means that it will not be given the best attention or care. Of course, if you know what you are doing, then this would give you a low cost way to control your own funds.

Loaded funds mean that you will have to pay a sales fee for your purchase. Along with the fees, though, comes a lot better management of your investment. Your broker will pay closer attention to how your investments are doing which also means that you have a lower risk involved.

Choose How Much Involvement You Want

With no load funds, you need to pay attention to your own investments. This is because you are the only one making those choices, and any success you have is largely up to you. You also will not receive investment counsel from your choice of mutual fund company.

Loaded funds are the best way to go if you want professional care over your investment. This allows you to take a hands off approach and they do the investing for you. They know that poor management will mean loss of customers and money so they have a very good reason to want to do a good job.

Make Decisions over the Variables

Once you decide about the cost needed for the investment, there are some other factors you want to choose from. This would include things like:

• The time frame

• The taxes

• The fund's goals.

You will also need to consider how profit comes to you. If you are looking for dividends to be paid, then you need to look for funds that will do that.

Others may give capital appreciation or capital gains distribution. Just be sure that you know beforehand, so that you know how money is either to be paid to you or reinvested.

All mutual fund companies are not the same, so you will need to look over the details of each before you decide. If you want a particular fund, then you will have to choose from those companies that deal with it. For more information on investing in shares visit http://www.investinginshares.freedvd.com.au/

James McInnes is a professional share market trader and investment entrepreneur, with many years experience trading the Australian Share market. You can visit his site at http://www.investinginshares.freedvd.com.au for further information on trading the Australian Share Market