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How do you choose a mutual fund?

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Anonymous

16y ago
Updated: 8/16/2019

A mutual fund is an investment vehicle with a well defined, easy to understand investment strategy and goals. People choose mutual funds that match their own financial goals in a diversified way.

In many cases it is possible to match individuals investment goals with just one mutual fund. In other cases, people use several mutual funds. If many funds are bought, none of the funds is usually a strategy match by itself. It is the synergy of the funds that makes the trick.

Mutual funds range by the security type: there are bond funds that invest in bonds, stock funds that invest in stock and blend funds that invest in both in a pre-determined proportion. Of these, bond funds are less risky and stock funds are most risky. At the same time, historically stock funds offer more attractive return figures.

Therefore one needs to establish a financial strategy first. A financial strategy varies with goals, time-frames of investments. Balancing risk and return is key to achieve investment goals faster. Only after the strategy is established one selects appropriate mutual fund or funds.

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Wiki User

16y ago

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