Variety: Mutual Funds Come In Many Different Categories and Types. As you grow your portfolio of mutual funds, you will want to diversify into various mutual fund categories and types. You can invest in mutual funds that cover the main asset classes (stocks, bonds, cash) and various sub-categories or you can even venture into specialized areas, such as sector funds or precious metals funds. Affordability: Mutual Funds Have Low Minimums, Most mutual funds have minimum initial investment requirements of $3,000 or less. In many cases, if the investor initiates a systematic investment program, where they have a fixed dollar amount or fixed number of shares purchased once per month, the initial investment can be as low as $1,000.
Perhaps the greatest benefits of buying mutual funds are that they are simple enough for beginning investors to buy and manage but they are also powerful and productive enough for even the most seasoned of investors. This guide will walk you through the purchase of your first fund to building a complete portfolio of mutual funds. Choosing the Place to Buy Mutual Funds. Although you can buy mutual funds through a discount broker, such as Charles Schwab or Scottrade, the best way to buy mutual funds is through a mutual fund company. But you don’t want to start with just any mutual fund company; you’ll want to do a bit of research to find a reputable firm that has a broad selection of low-cost, high-quality mutual funds.
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Opening an Account to Buy Mutual Funds. If you don’t already have an investment account at a brokerage firm or mutual fund company, you’ll need to open one before you’re ready to make your first purchase. Opening an account doesn’t require money; all you need to do is choose the company where you’ll invest and follow their procedures.
Choose Wisely When choosing mutual funds for your portfolio, do your homework. Review each fund’s fees and individual asset allocation to make sure you’re choosing a fund that fits your investment goals and risk tolerance. Also, consider a fund’s performance. While past history doesn’t guarantee future results, it’s also wide to look at how much a fund has gained or lost in the past.
Mutual Funds Are Accessible. Many mutual fund companies allow investors to get started in a mutual fund with as little as $1,000. Schwab’s mutual fund family has a minimum of $100 for many of their mutual funds. And since mutual funds can be easily traded, the combination of low cost and ease of use makes them accessible. Systematic Investing and Withdrawals with Mutual Funds. It’s simple to take advantage of systematic investing with mutual funds. Many mutual fund companies allow investors to invest as little as $50 per month directly into a mutual fund. Money can be pulled directly from a bank account and invested directly in the mutual fund. On the other hand, money can be regularly withdrawn from a mutual fund and be deposited into a bank account. There are generally no fees for this service.