12 Keys For Building Wealth In Mutual Funds

Build your wealth investing in mutual funds. Mutual funds are run by professional money managers who create the portfolio, so you don’t have to do it all yourself. There are different types of mutual funds, high-quality and low-cost mutual funds that you can start investing with as little as 500-$1,000. For over 37 years, I buy investments and create portfolios using different mutual funds for both my clients and for myself. Mutual funds make investing in stocks, bonds, and other securities easy. Mutual funds allow you to be diversified and be as conservative or aggressive as you want.  The securities in the mutual fund portfolios change price during the day. However, the shares are priced at 4 PM EST. and only have one value each day.

You can reduce your stock market exposure transferring to the money market fund (cash or cash equivalent) to reduce your risk. When you believe the market is less risky, you can go out of the money market and into the equity fund.  Although it might sound complicated, it’s easy and only takes a few minutes. When you are considering making an investment into a mutual fund, its important to know what the portfolio is invested in, because some mutual funds are riskier than others.  I am going to share some basic tips that will help you be more comfortable and more informed using mutual funds in your portfolio.

12 Keys For Building Wealth In Mutual Funds

1. Look in the prospectus, a document available from the mutual fund company, that gives you an overview of the investment objectives, fees and trading policies.
   
2. Diversify your assets by using different mutual fund families.
3. Purchase mutual funds that have a good long-term track record of performance of 10 years or more. Compare the mutual fund to its benchmark index. To get an idea of how the fund has done in the past by looking at its 3, 5, and 10-year performance.  The S&P 500, is a common benchmark used for U.S. Equities.  For bonds its helpful to use the ETF Barclay’s US Aggregate Bond Index iShares, (AGG); or the mutual fund Vanguard Total Bond Market Index, (VBMFX) as a comparison.
4. Go over how the mutual fund performed in 2008 one of the worst bear markets in stock market history.
5. Find out the fund’s biggest one-year loss. This can be found in a year by year performance of the fund.
6. Buy mutual funds with a proven history or track record, rather than a mutual fund that had only one spectacular year of performance.
7. Look at year-to-year changes to see how stable the fund’s returns have been, or how they have varied over the years.
8. Review what percentage are the top investments. This will tell you if the fund is in a few securities or if it’s more diversified and has many securities.  If it’s only has a few holdings, it may be volatile and greater risk.
9. Look at the mutual fund’s sectors to see what percentage the mutual fund is in overseas markets, US equities, bonds, and cash. You can get the specifics from a mutual fund fact sheet that is most of the time available on the funds website or by calling the mutual fund.
10. Be aware of the mutual fund that has a holding period that is required before you purchase to avoid paying an unexpected fee. For example, some funds charge a 2% fee if you sell your investment before 30 days.
11. Buy the share class that has the lowest expense ratio. This will save you money if you hold the mutual fund for the long term. Class I is usually the best share class to invest in.
12. Don’t pay a load charge (a front-end fee) for a mutual fund. There are many good mutual funds that can be purchased through a brokerage house (e.g. Schwab, TD Ameritrade, or Fidelity) with load charges waived, no fees or low fees.
    

You can successfully grow your wealth using mutual funds in your investment portfolio,  Before you invest in a mutual fund do you your due diligence.  You don’t need to become an expert on mutual funds, but it’s important for you to know what your mutual fund is invested in. Remember no investment is guaranteed to make money. However, mutual funds offer an opportunity where you grow your wealth to achieve financial security for your future.

If you like this article you will love my e-course Wealth Through Investing Made Simple

Bonnie S. Gortler

Bonnie Gortler, a Consultant, Coach, and Author, is a Wealth & Well-Being expert with over 35 years of experience in managing multi-million-dollar client portfolios at a top-rated investment firm. As the author of Journey to Wealth, Bonnie is dedicated to teaching the importance of risk management and achieving true financial well-being by integrating both the technical and mental aspects of investing. With an M.B.A. and certification as a life coach, Bonnie combines her passion for coaching, consulting, and blogging to inspire people globally. Her powerful techniques and winning mindset help others experience personal growth and financial success. Explore wealth-building tips, personal development strategies, and more at BonnieGortler.com, and discover how you can enhance your wealth and well-being.  


Connect via LinkedIn, X, Instagram, Pinterest, & Facebook
Join my Facebook Group – Grow Your Wealth and Well-Being
Join my FB Group – Wealth Through Market Charts
Order your copy of “Journey to Wealth” today!


Read Bonnie's Full Bio  »