For beginning and experienced investors alike, investing in mutual funds can be overwhelming due to the fact that there are literally thousands of funds to choose from with many details to be aware of.
If you are interested in investing in the best performing US mutual funds there are some basics you should be aware of when investing in these popular investment tools.
You should carefully consider you specific investment objectives, risk-tolerance, and what to look for in a mutual fund prior to investing any capital. Online broker ETrade offers comprehensive fund screeners that can be used to find the mutual fund that is best for you.
Best Performing US Mutual Funds: Why Invest In Mutual Funds
Mutual funds offer investors the potential to earn a higher return on your investment than guaranteed investments such as CDs, while also saving money. Mutual funds you can achieve greater diversity, as a mutual funds often owns many more securities than you would be able to invest in on your own.
Because mutual funds are similar to baskets of investments, one single mutual fund can invest in as many as hundreds of securities referred to as the fund’s “holdings”. While many of the best performing US mutual funds are diverse enough to invest a large portion of you capital in, it is a good idea to diversify your capital across various mutual fund types for maximum diversification.
Carefully review each mutual fund’s prospectus for a comprehensive look at the mutual fund. Online broker ETrade provides a broad array of investment tools to match you with the mutual fund that is right for your situation and investment objective.
Know Your Risk-Tolerance, Loads And Expenses, And The Fund’s Past Performance
Mutual funds have historically provided investors with greater returns due to the risk premium rewarded to investors. In the world of investing you must take on more risk in order to realize more reward. Carefully consider your individual tolerance for risk when looking for the best performing US mutual funds.
It is also important to keep in mind the costs associated with purchasing and selling mutual funds. A front load mutual fund charges are made upfront and can be as high as 5%. Back load funds charge their fees when the fund is sold and can also be in the range of 5%. There are also what are referred to as No Load funds that offer no front or back load.
Keep in mind that while not all mutual funds charge loads, all mutual funds carry underlying expenses averaging around 1.5% for the ongoing management of the fund. There may also be additional expenses associated with the fund that must be taken into consideration.
When considering a mutual fund’s past performance, review the fund over longer periods – 5 to 10 years – and compare the performance of the fund with that of other funds in that category. Take into consideration the tenure of the manager running the fund in addition to the fund’s past performance.
The comprehensive research tools, personalized service, and low fees and commissions offer at online brokerage ETrade make investing in mutual funds easy, affordable, and profitable.