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Mutual Funds >> Before Investing In Mutual Funds

Before jumping into mutual funds investments, firstly consider the fund's investment objectives, risks, charges and expenses. Firstly. ask your mutual fund broker for a prospectus containing this information. Read it carefully

Make sure your broker is recommending you the correct mutual fund by asking him some intelligent questions. Get some information on the mutual funds by asking some of these basic questions.

What does the mutual funds invest in? Does it invest in stocks, bonds for income , money market and what is the combination of these investments? Is it in high-growth stocks or undervalued stocks?

Do this mutual funds invest largely in the stock market or bonds or money market?

How did this mutual fund performed over one-year, three-year and 10-year period? Is it a better performer than competitor's similar mutual funds? During down markets, how did the funds stack against its peers?

What are the risks here? Is it a low, moderate, high risk fund? Which is important if you are a risk-averse investor.

Where do the funds invest in ? Large , medium, small-sized companies, domestically or overseas

What are the fees? Do you have a choice of a front-end or back-end load ( A load is a commission). What is the fund’s expense ratio?

Having done that homework, some other points to consider is whether that mutual fund fits in with your investment goals and investment comfort level. If you are a moderate investor, ideally the mutual fund you pick should have a mix of stocks, bonds and cash.

The track record of the funds manager is also important, you might want to go with a manager with a longer-term track record.

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