Investing Tips Information

A mutual fund is a collection of investment money pooled from lots of people to be invested for a specific objective.  When you invest in a mutual fund, you buy shares and become a shareholder of the fund.  A fund manager and his or her team of assistants figure out in which specific securities (for example, stocks, bonds, or money market funds) they should invest the shareholders’ money so that they can accomplish the objectives of the fund and keep you (and your fellow shareholders) as a happy customer.  Because good mutual funds take most of the hassle and cost out of figuring out which securities to invest in, they are among the best investment vehicles ever created:

1. Mutual funds allow you to diversify your investments, that is, invest in many different industries and companies instead of in just one or two.  By spreading the risk over a number of different securities representing many different industries and companies, mutual funds lessen your portfolio’s volatility and the chances of a large loss.

2. Mutual funds enable you to give your money to the best money managers in the world, some of the same folks who manage money for the already rich and famous.

3. Mutual funds are the ultimate couch potato Investment!  However, unlike staying home and watching the TV or playing Nintendo, investing in mutual funds can pay you big rewards.

4. You can use mutual funds to invest in specialized areas, such as currency funds, futures funds and offshore markets (such as China, India and Russia). Many people would not have a clue as to what to invest in within these areas, but great returns can be made with the better managers.

While mutual funds can be good, there are many out there that give very low returns.  In some cases, the managers do not have that much incentive to perform well, so the fund has low returns. Banks try to get you into some of their managed funds, but their main concern is getting the fees from you while they invest offshore with your money and make greater returns. I would stay clear of managed funds through banks. You need to do some research into the fund that you are interested in before you take the plunge.  How has that fund performed in the past and what is the fee structure?  Is there an incentive for the managers to make the fund perform? Also, some of  the better mutual funds require a substantial amount of finances before you qualify to participate in them.

I personally have invested in mutual funds through  Landau Securities.  I found that they were a great source to invest in mutual funds because they provided the means to invest in funds that were run by the best managers in the world. Most of these managers operate in tax havens, but I shall talk about this in more details in another post. They also had life bond options, which allowed members to participate in a variety of high quality funds without having to qualify for the large entry fees.