If you have considered investing with a mutual fund, you are not alone, millions of Americans are flocking to these open end mutual funds because they are recognizing the common sense of such a proposal.
Unlike hedge funds, Mutual Funds are very heavily regulated by the FTC making them a safe option for small investors.
These work by pooling together many investors funds and controlling those funds to take advantage of opportunities that come about.
Typically they will invest in stocks, bonds, and various security instruments, including even real estates and property like shopping centers or buildings.
They tend to be very conservative with their choices however they are typically aggressive about getting in and out of investments.
This means the return is usually quite good, depending on the fund.
The key point to remember when choosing a mutual fund is that past performance does not in any way indicate future results.
Past performance can however indicate if the fund is consistent or not.
It is wiser to avoid volatile funds that make large gains one year, then losses the next because this can indicate a measure of instability and risk taking.
However, this must be a personal choice you make.
Also mutual funds are not guaranteed or insured by the FDIC or the government.
Even if you bought the shares of your chosen fund from a bank, (which is insured by the government) they will typically be acting as brokers for the product and there banking status is not transferred to the product you purchase.
Another thing to remember is that fees and charges can erode the annual gains you make so it is good to make sure you compare on a fees and charges basis too.
You can use the following calculator to better understand Mutual funds fees and charges calculator.