How to Manage a Growth Fund

The way to manage a growth fund is to diversify your portfolio as much as possible. A growth fund's main goal is earnings for the investor, so while they can be risky, the payoffs can also be high. Growth funds generally invest in companies that then reinvest in research or growth. Unless you have a thorough understanding of investing and the stock market, your best bet is to hire a fund manager.

Managing Your Growth Fund

Make a list of several different funds you may wish to manage. You can find mutual funds lists at Morningstar. Check out their 1-, 5- and 10-year performances to give you an idea of their stability and growth.

Choose the growth fund you wish to invest in and manage based on risk factor, performance, cost and duration.

Consider your growth fund alongside your other investments to make sure it complements your portfolio.

Decide how much money you intend to invest and whether you want to invest a lump sum or on a monthly basis.

Follow the market carefully to see how your fund is doing. Consider any advice from your broker or manager about selling.

Be prepared for large upswings and downturns. If you find the risk involved is causing you too much stress, sell and talk with your financial advisor about lower-risk investment options.

Tips & Warnings

• Learn something about the mutual fund you choose to invest in, and get to know some information about your manager and his track record. An educated investor is a more successful investor.
• Keep your tax advisor in the loop. Investing in mutual funds can have significant tax consequences. Make sure your tax planner knows about the investments you plan to make.
• Listen to the manager. Fund managers typically issue quarterly or yearly updates, explaining their investing philosophy for the prior and upcoming quarters. Read these updates to make sure the fund manager's philosophy still reflects your investing goals.
• Growth funds can earn you a lot of money quickly, but their risk level is fairly high. Don't get involved with a growth fund if you aren't sure what you are doing or if you can't afford to lose the money you invest.