Learn How to Build Wealth Volume 2–Mutual Fund Types
There are thousands of mutual funds available to choose from. Selecting appropriate investment vehicles to meet our needs mostly depends upon:
- How S.M.A.R.T. our goals are
- How well we understand what we are investing in
- The strategies we use to have S.M.A.R.T.E.R. goals.
Once we have identified the approximate rate of return needed to reach our goal, we should determine if an investment will meet our needs. One way to do this is to look at a companies 10 year rate of return history. Although this does not mean past history will predict future returns, it does provide most investors with a certain level of comfort.
Factors that help identify mutual funds that best meet our needs can be found on the fund fact sheet under investment objectives/strategies, top holdings and asset allocations.
To further help choose the right mutual fund(s), each mutual fund can be broken down into asset classes such as equity or growth, money market, fixed-income funds, as well as varies combinations of investments that form what are known as hybrid funds.
In addition, there are mutual funds that includes commodities (gold, precious metals, etc), real estate, exchanged traded funds, and mutual funds within mutual funds. With so many funds to choose from it is important that clear goals are defined and lots of research is done prior to investing.
For more information on mutual funds Click Here
Want information on Exchange Traded Funds (ETF)? Click Here