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Tuesday, November 30, 2010

Tips To Help You Succeed With Mutual Funds

Tips To Help You Succeed With Mutual Funds: The long-term success (or failure) of a particular mutual fund investment may not depend on the current or past performance. It may seem lucrative to buy the fund when its doing well but, as a new investor, you should not be tempted by the recent performance of an investment, since, at that point in time, it may be selling at its highest price. This is because, as an investor, you want to buy stocks when they are at their lowest and sell them at their highest price, not the opposite.

Newly created funds have smaller number of stocks in their portfolio. This makes it easy to determine which stock is performing well and which one is under-performing. The ones that perform well create a large positive impact because of their small size and the ease with which their analysis is done. As the stock portfolio grows, the impact of the contribution is less felt since, most funds fail to sustain initial positive performance records.

The expenses, fees and the tax charged needs to be studied carefully in order to reap maximum benefits from your mutual fund investment. Funds that charge higher fees must also reciprocate in terms of giving better returns to the investor. A small percent increase in fees and expenses could mean that, someone is eating on your hard-earned returns in the long run. As an investor, make sure you understand how a fund that you invest in is influenced by the amount of tax that will be charged by the government. Read the prospectus available at the firm offices to understand how much tax you will be obligated to pay when the dividends are paid out.

A mutual fund manager pools resources from many different small investors and buys bonds, securities and stocks. This means that, your portfolio is already diversified and there may not be any need to invest in too many of such funds. The only time you would do this is when you wish to invest in the different types of stocks that are available. For example blue-cheap stocks, income stocks or cyclical stocks. If you have enough money at your disposal, you could go for international funds, which would yield more income than the domestic ones.

A fund manager always takes an investment risk in order to get the desired results. Some of the risks that they take may sometimes make you uncomfortable since, they may not be in line with your goals. However, its important to appreciate the fact that, all mutual funds are associated with some form of risk. Looking at your investment as a long-term project will shield you from the short-term risks that may be associated with the fund. For the latest updates PRESS CTR + D or visit Stock Market news Today

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