How to Buy a Mutual Fund

Understanding how to buy a mutual fund is essential for a relaxing retirement. This article teaches how to invest in mutual funds.

A mutual fund is a professionally and actively managed investment tool that pools money from many investors and invests it in stocks, bonds, and various other securities. It can have a broadly diverse portfolio or a narrowly focused portfolio. A mutual fund may be extremely high risk or very safe. Some pay dividends, some have transaction fees, and some require minimum investments. How do you decide which mutual fund is the best one for you to invest in...?

The first thing you need to do is assess your risk tolerance. Generally, the greater the risk = the greater the potential profit (or loss). Your risk will largely depend on your time frame. Buying a mutual fund when you're 30 years old is a lot different than when you're 60. The closer you are to retirement, the less risk you should be exposed to.

There are many different companies that offer mutual fund investing. Vanguard, Fidelity, eTrade, Schwab, and Ameritrade are some of the best. I will provide the names and ticker symbols of some leading mutual funds to consider for your investment. Please do your research and risk assessment before purchasing any mutual fund. The number to the right of the fund name represents the level of risk associated with the fund (5 is the highest risk): CGM Focus Fund (CGMFX) - 5 Fidelity Fifty (FFTYX) - 4 Fidelity Dividend Growth (FDGFX) - 3 Allianz Dividend Value (PEIDX) - 1 Third Avenue Small Cap (TASCX) - 5 Janus Enterprise (JAENX) - 3 Again, these are just for your consideration. I do consider them to be some of the best in the industry. Good luck and please feel free to ask questions!

By ehow.com