Choosing The Right Mutual Fund

In this day and age of economic hardship, some people are thinking about investing their hard earned money. Yes, in a time of hardship, people are thinking about this! It is because stocks are at an all time low right now. If you have never invested in mutual funds before now, then I have some tips for you.

The first step is to figure out what you want to accomplish with the investment. Is this for your child’s education, or for your retirement? Maybe it is for a second home.

This will help determine step number 2. How long you have to invest. Do you only have 20 years to make the money you need? Maybe it is 30, if you are lucky 40 or 50 years!

These two steps will help you determine what kind of portfolio you are looking for.

If you are looking to get the most growth out of your money, then an aggressive growth mutual fund or an international growth mutual fund is the way to go for you. These kinds of funds invest in stocks that have a great chance at becoming big. There is a down side. That is that there is an extremely high risk in these funds as well. As fast as they can go up, they can come down!

The next step down in risk is growth mutual funds. There is still a high risk for losing funds, but not as high as the previous choice.

The next lowest risk group is growth and income mutual funds. The risk level is ranked high to moderate, and they invest in common stocks that have a good possibility of dividends and appreciation on your money.

The next level down is fixed income mutual funds and equity income mutual funds. Their risk is considered moderate to low, but the possibility for income is very high.

The decision to invest in mutual funds is a very important one, not to take lightly. Make sure you have a clear picture of your goals, and you will be well on your way to success!