How to Invest in Mutual Funds

Investing in Mutual Funds is a very popular form of investing. Mutual Funds have managed to make a significant amount of money to its shareholders over the years. Mutual funds are a great form of investing for those who don’t have time to do the required research in order to buy individual stocks. This doesn’t mean you don’t need the basic understanding on what mutual funds are and how they work. Remember we are investing our hard earned money; we need to know it’s going to be in the right hands and that eventually we are going to see profits in the future. Mutual Funds have also proven to be a great and simple way to manage your 401(k), just another plus.

But…. What is a mutual fund?

A mutual fund is an investment company that invests its shareholders’ money in a diversified portfolio of securities giving you an advantage to diversify your money even if it is $500, reducing the risk in your investment. Another advantage a mutual fund offers is its professional management. Some of the best heads on Wall Street are hired most of the times to manage this funds. Mutual Funds are available at almost any brokerage company such as: E*Trade, Scottrade, Options House, Fidelity, etc.…

   -For a Complete lesson on Mutual Funds Go to our Free Lesson on Wall Street College’s class by clicking HERE


ForwardPick a Mutual Fund that…

  1. Invests in high-quality stocks or bonds
  2.  Is well-diversified across several industries and sectors of the economy
  3. -Has a long-term perspective and a manager or (better yet) a management team with many years of experience.
  4.  -A company that has proven to give significant returns even on down years such as the market bubble of 2000, or the recession on 2008.
  5. -Avoid companies that “shuffle” their managers every few years (which is virtually all of them!)
  6. -Has been around for decades and performed consistently well in both good and bad markets


See our Article: Meet Wall Street Gurus: They took their mutual funds to another level HERE

The Research:


(Source: E*Trade)

In this Mutual Fund Detail Image grabbed from E*Trade (which I personally use to buy stocks, mutual funds, and do part of my research on them) I have highlighted the key indicators to discuss on this article.  *Usually mutual funds have 5 letters on their ticker, such as SMVLX.

Simply click the mutual fund tab from your brokerage account and search for the mutual fund of your choice or grab the top performers and do the research, don’t simply invest in them because of their averages.

In the Fund Details picture we see the first arrow indicates the Net Expense ratio of the Fund usually means the percentage of the fund’s assets that go to paying the cost of expenses or “loads”. They exclude any fee waivers or reimbursements given to investors. They usually include investment advisor fees, operating expenses and 12b-1 fees. Usually most Fund’s are charging 1.5% lately. The number can vary but we believe 1.5% is the average now days.

Gross Expense Ratio on the second arrow indicates all expenses, making this the key percentage number to evaluate them.

Total Net Assets on the third arrow indicates the total assets managed by the fund I usually encourage investors to pick funds with a moderate to big Net Assets, but big is not always better. Quality in investments is what drives the Fund, we will discuss more about it later.

Fund Inception shows when the fund was created giving us a picture of how “rookie” or “seasoned” a fund may be, I would say a Fund created no longer than 10 years could be a little risky. To assure the Fund is managed by good hands a little research on the Fund’s manager will help assure that the Fund is ran by an experienced investor. It’s important to find the record of the Fund’s manager, just like in baseball cards; Fund managers show stats and records too.

Order Cut time simply indicates at what time the fund stopped trading

On the next column we can see indicators for us showing us the availability and the minimum starting investment requirements we need to start investing with the Fund. Minimum requirements vary from Fund to Fund.

An important section to research about is the Average-Annual Returns, which indicates us how well, or how bad the Fund has performed during the past years. This is important because we want to know if the Fund has managed to create returns on the long-term and see their performance on the short term.

In my opinion the most important part of the research is the “Top Holdings” column, we want to see where our money is allocated and if the Fund is buying quality stocks, bonds, or commodities. We get a sense of ownership by knowing where our money is allocated.

  • It’s important to decide if you are going to invest in an Aggressive Mutual Fund or a Conservative Fund. Aggressive Mutual Funds can generate pleasurable and high growing profits, but they are a riskier form of investment. If you are a risk averse person, I would recommend you to invest in Funds that invest in high quality bonds and stocks.


See Next: One Easy Tick to Increase you Savings.


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Frank is the Founder of Wall Street College and a dedicated stock investor. Having an enormous passion for Investing, Stocks, and Success, Frank decided to start with the purpose of educating people on how to put their money to work, teach them how to invest in stocks, and how to always strive for Financial Freedom.

1 Comment

independent broker dealer · 21 September, 2017 at 8:16 PM

Shared Funds are professionally overseen speculation plans where cash from a few financial specialists is pooled by an Asset Management Company (AMC) and put resources into various instruments, for example, obligation, value and currency advertise securities. …

Resource distribution.

Shortlisting reserve sorts.

Contrasting assets.

Significance of broadening

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