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Is Investing in Mutual Funds Right For You?

By Jason Markum

You don’t have to tell me that investing in the stock market is hard! I’ve had my fair share of losses over the years because of wrong choices that I’ve made against my better judgment. It’s easy to go with your gut instinct and then lose your shirt because you made the wrong decision. The sort of thing keeps many people out of the stock market and the thus keeps them from making decent returns for their retirements accounts.

One way to invest in the stock market without all of the risk that are often involved in picking individual stocks is investing in a solid mutual fund. But mutual funds are not right for everybody, so how do you know if they are right for you? That’s what I’m going to talk about in this article today.

There are many things that influence the future values of any stock in any company. Somebody once told me that there are over 100 variables that could influence the stock. I’m not sure if I agree with the number 100, but there certainly are many things that can go into determining what the price of the stock should be at any given time.

With so many variables, how can the regular individual investor pick stocks themselves? Many times they can’t and in those cases your best bet is to find a good mutual fund, but which one is right for you?

The answer will depend on several different things. For instance, how old are you? If you are younger and you have many many years ahead until you retire, then you may be best served by investing in a mutual fund that focuses on growth.

On the other hand, if you are older and getting close to retirement age then you are definitely going to want to stay away from those same sort of growth oriented mutual funds and instead focus on something more conservative that deals with income because many older people rely on their investment portfolio to produce income and thus support them during retirement.

If you have already reached retirement then you may be interested in the relative safety of bonds and therefore may look for a good bond mutual fund or income producing mutual fund.

The next thing yet ask yourself is whether to invest in a load or a no load mutual fund. A no load fund often makes pretty good sense because load funds charge upfront commissions and expensive liquidation fees down the line.

No load funds, on the other hand, usually don’t have any commissions at the time of purchase and will often allow you to liquidate without any sort of penalty. Historically speaking the two types of funds have performed relatively the same so there’s no real reason to go with the more expensive of the two which is the load funds.

Investing in a mutual fund may be right for you, and if so I advise you to do as much homework as you can about the specific mutual fund that you want to invest in. Take some time to research the people running the mutual fund and their past record before you invest in any sort of mutual fund.

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