Five Things to Look for When Buying A Mutual Fund

mutual fund buyingThere are plenty of reasons that show how very bad mutual funds are for investors: weak performance, high fees, closet indexing, you name it.

But mutual funds can serve a purpose and, yes, there are some good ones out there. Such funds can still be a good place to start investing, as minimums can be low and diversification can be instantly achieved.

Instead of highlighting some top funds (which will likely revert to the mean anyway), let’s focus on what you should look for in a mutual fund.

If you haven’t by now been convinced that ETFs and stocks are better, we can at least try to help you minimize problems with your future fund purchases. Here, then, are five things to look for when buying a mutual fund.  Read More…

This article has 11 Comments

  1. Nikhil M.

    Just make sure their portfolio is diversifed enough to be able to weather down times. The best funds will be so buffered that during down times in one market will show a rise in another and you will actually see a net gain. At least for me.

  2. Sebastian B.

    I'm with Questrade and how exactly do i buy mutual funds? Do i call in or is there a tab i go to to see what they have?

  3. Will

    Hmm..disagree with its first point about not having managers own stock personally. Markets are variable and owning their own keeps them fully aware of the intertwined nature of their stocks and ours.

  4. Jaymie

    Mutual funds have unjustifiably gotten a bad name in recent years. They are still very good and smart investing especially for people who want to focus on life and not their holdings every step of the way.

    I carry 7 funds and couldnt be happier. 🙂

  5. Ezequiel Mathis

    It's always tricky finding the right mutual funds since the market will change and the hope is you have a quality manager to be receptive to adjust the holdings constantly.

    It's because of this uncertainty that i stick with index mutual funds. Sure there are managers still but less MER.

  6. Shane McNeil

    Are there any extra tax benefits to mutual funds? I'm mean when i buy/sell (or a manager sells) do i pay a lower % on taxes?

  7. Reggie

    Love'em hate'm relationship. But overall they've made me a nice nest egg so i cant complain too much.

  8. Winnie Greenup

    Vanguard has always been a quality staple.

  9. Yarnell Gauger

    Agreed that having a seasoned manager who has seen several recessions is a big plus. That is what i've been doing for decades. It separates the sheep from the wolves.

  10. Alejandro

    What is the most one should pay for front/back load fees?

  11. Layton K

    Buying a fund that hasn't grown into a beast is always good. When they grow too large they forget about everything and its their undoing. They are less motivated to seek out returns since they now have what they want (enough people to pay endlessly their fees).

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