How to Find the Right Mutual Funds for You

How to Find the Right Mutual Funds for You

How to Find the Right Mutual Funds for You

A mutual fund can be a wise way to invest your savings for the long term, whether it's for your retirement or your child's college expenses. However, there are thousands of funds on the market. It's critical to find the right fund or funds so you can maximize your savings and get your ideal return on your investment.
Before deciding on a plan, you need to identify your objectives and time frame. If you're looking to make a major purchase, like a new house in three years, you'll want a more conservative fund than if you're looking to save for your retirement in 20 or more years. The longer the time frame, the more risk-tolerant you can be in your investments.
There are numerous rating services out there to help you identify what funds would work for you. Those include Standard & Poor's, Morningstar, Lipper Analytical and Value Line. Check them all out, and after you've identified the categories that best serve your needs, you will want to study the individual funds in those categories. Ask for a free copy of the fund's prospectus. This document tells you the fund's objectives, where it invests its money and the risks associated with those investments.
The fund’s performance is one of the key metrics to find and understand. Some funds do well in short-term situations, but only one in about four were able to beat the S&P 500 index over the last five years. Keep that in mind as you determine your risk tolerance. You also can potentially mitigate your risk by diversifying your portfolio and buying into multiple funds.
Once you've decided on the mutual funds that are right for you, your best option might be to buy directly from the fund itself. Brokers can offer advice on funds, but if you buy through them, you'll be paying a commission on top of your investment. It’s a good idea to start an investment off small and gradually because that will help build up your shares.

This information is not to be used as investment advice, but for informational purposes only. Republic Bank & Trust Company prohibits the dissemination, distribution or copying of this document without the Bank's prior written consent. Please consult your financial or tax advisor for further information. Member FDIC.