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The Secrets To Picking The Best Mutual Fund

By Jason Markum

Investing in the stock market is too dangerous and too risky for many people. The fact of the matter is, unless you’ve had fairly specific training and a lot of experience doing it, investing is very hard and since we’re talking about people’s lives and their retirements, you don’t want to take any chances that you don’t have to.

But you have to invest in something, and so luckily we have mutual funds which allow people without the necessary investment skills to, nonetheless, invest for the future and for their retirements. But of course this begs the question, which mutual funds should you invest in?

In this article today I want to discuss several secrets that I have for picking the best mutual funds. Anybody can take advantage of these secrets, you just need to know a few things that I will be discussing right now.

First I should mention that there are usually two types of investors. The first type just wants to preserve their capital and increase it at slightly greater than the rate of inflation. The other kind of investor wants to make huge over sized returns. Both can find places in mutual funds to make them happy.

My first secret is to identify the best performing no load mutual funds that follow your specific objectives, whether you are looking to preserve capital or shoot for the moon as I alluded to above. You can find this information at most financial websites with a little searching. One strategy would be simply to invest in several of the top performers and evaluate again in a year or two to see which ones have performed the best.

My next secret is to analyze the performance of the mutual fund in great depth. Most people look at a mutual funds performance during the last couple of years but I prefer to go back several years or as far back as a decade or longer. Why is that? Because most mutual funds will do okay during a bull market when the stock market is up in general. But you want to look back into the past during recessions to see how well the mutual fund has performed then so that you have some sort of an idea how well they will perform during future financial downturns.

My next secret is to look for consistency. Read the annual reports from every fund that you’re looking to invest in for the past 5 to 10 years. Those reports will describe the overall strategy of the fund. Has the fund’s strategy remained consistent over the long-term or have they changed from fad to fad over time, wildly chasing profits. You want a firm that engages in consistent strategies with a proven track record of profit steadily over time.

Well there you have three fairly good secrets that will help you to choose the best mutual fund for your investment needs. Hopefully this will shed some light and help you to understand what to look for in a fund. At the very least, it should help get you out of the risky stock market and into the relative safety of the mutual fund world.

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