Mutual Funds Investment Advice: Top 10 Mistakes To Avoid
1. Make sure that any mutual funds investment advice you receive does not cost you an arm and a leg. One of the most common mistakes made is paying an advisor too much money to tell you where the best fund choices are. Most investors can do this without professional help, if you are willing to take the time and effort to do this.
2. Take advantage of the many different tax free mutual funds that are available. These funds can help you limit the taxes you may owe from your investments, and they can offer city, state, and federal tax advantages.
3. Always purchase mutual funds right after their year end distribution date when possible. This is true for REIT mutual funds, green funds, and any other mutual fund that you may want to invest in. If you purchase a fund before the distribution you will get the tax penalty but not the capital gains.
4. Not doing the necessary research on your own is a big mistake. Seeking out mutual funds investment advice if you are looking for guidance is okay, but even if you are advised to invest in a fund by a professional you should still check the fund out yourself as well. The expert does not have their money at stake, you do.
5. Market timing mutual funds is not always possible, and in some cases an attempt to do this will only increase the fund expenses because there are more trades occurring. Market timing is perfectly legal, and experienced investors may see some success with this strategy, but it is not ideal for everyone.
6. One top mistake with mutual funds is not looking at the portfolio of fund holdings very closely before making an investment. Every fund is different, and will have a different mix of holdings with different weights. .
7. Not comparing fund expenses is a common mistake made. At times mutual funds investment advice may be needed but you should look at the fund operating and marketing expenses before putting your hard earned capital down.
8. Ignoring low initial investment mutual funds can be a mistake, because these funds do not require a large initial investment. Even if you do not have the wealth of Rockefeller or Warren Buffett you can invest and watch your money grow with these options.
9. Use caution with any mutual funds investment advice, and make sure you are dealing with a financial advisor who does not receive a fee when you buy a specific fund. Some unethical advisors may steer you towards a fund not because it is best for you but because it pays the biggest commission to them.
10. No load mutual funds can be the best option for many investors, because these funds do not charge any load fees. In most cases a load fee is simply a commission, and choosing mutual funds that do not involve this fee means you save on expenses, and more of your capital goes to work for you instead of ending up in someone else’s pocket.