If you can not decide where to invest $ 10,000 and just need to park your money somewhere with moderate safety and return, a mutual fund may be the best option for you. “But it's such a boring, plain- Jane investment!” you say. True as this may be, this is a great, moderate investment that suits many people's needs and investment strategy. Below are some of the reasons that a mutual fund is really one of the best investment options out there today.
One of the best things about a mutual fund is that you get the benefits of stock investing without having to actually pick the stocks. Picking stocks, for many people, can be excruciating. Even the greatest financial managers pick duds every now and again and one dud in a group of ten can really sink your overall investment.
Mutual funds, undoubtly, are not the most exciting thing to talk about with your friends, family and collections, as are stocks and the newly popular ETF's, but they really afford you much greater return, stability and peace of mind in terms of what will be left when you need to cash out on your investment.
Picking a mutual fund manager can be somewhat onerous. One of the things we strongly advise on mutual funds is that you answer to pay loads. No load funds are plentiful in the market today, but one of the decision points on picking a manager is whether they manage no load funds. Loads are essentially marketing funds. They are paid to brokers and investment managers to recommend their funds. If you will be researching and selecting your own mutual fund, there's no need for you to pay any marketing fees.
Research the performance of the top funds you might like to invest in. Simply put, some fund managers are just better at picking stocks at other fund managers and then, can show funds that outperform other funds. Check the various funds, review their track records (in the five to ten year term) and familiarize yourself with the various fund managers.
Be sure to check and see the minimum amount required to open an account with a fund. Some require as little as $ 1000, but there are some that require $ 10,000. The first time your stocks go down or you pay fees; your investment may dip below the requirement. This could cause additional fees or expenses, so be sure to check this out before buying into a particular fund.
Also, do some research into the companies that the fund buys into. New investors are excited to buy into well-known companies like Apple, Amazon, Google and Disney. And it's common to hear that you should invest in the things that you like. But the fact is that these companies are not going to make you the big returns on your investment that you're seeking. Look at the market independent of stocks and invest in sectors that you know to be growing.
Rely on good judgment and solid numbers. If still in doubt, feel free to consult online tools such as Morningstar's free fund screener. With a few hours' work and diligence, you could find the right mutual fund to invest your $ 10,000.