The Skinny on Mutual Fund Investing

Mutual fund investing is a lot like Thai cooking. Everyone has heard of it, most know a little something about it, but very few actually know how to do it and do it well. To invest in mutual funds wisely, it is important to have a good grasp on what mutual funds are, how they work, and what the risks involved may be. The fact that mutual fund investments are often considered safer than stocks, options, and other investments often misleads people to think that their investment in mutual funds are risk free. This, as you will see, is not the case.

The Risks of Mutual Fund Investing

First of all, mutual fund investments are not insured by the FDIC or any other federal insurance program or government agency. Even in cases where mutual funds are purchased through a bank (some may even bear the name of the bank), it is possible to lose money when mutual fund investing. Also mutual fund investments come with costs and fees that can affect the amount of return you receive on a mutual fund investment. It is important to know the costs of mutual fund investing before buying the funds. The Securities and Exchange Commission offers an online mutual fund investment cost calculator at its website which allows potential mutual fund investors to investigate the costs associated with the mutual fund they are interested in.

What is a Mutual Fund Anyway?

A mutual fund is actually a company that operates by taking money from a group of investors (all those that buy the fund) and then invests it in stocks or bonds, short term money market instruments, securities, options, or some combination of these investments. If the investments pay off, the investors make money. Because most mutual funds are run by people with a certain amount of financial savvy and stock market experience, mutual fund investing is often considered rather safe, but the potential for loss is real and must be considered.

Mutual fund investing can be advantageous because there are a number of federal regulations in place that are designed to protect investors. The actual investments that the fund makes are watched closely by market analysts and financial managers whose job it is to make appropriate decisions regarding the mutual fund's investments. The downsides include costs, taxes, and fees which must be paid regardless of how the fund performs.

Investment Tips by Mika Hamilton ? Read more free investment tips, tutorials & reviews at http://www.Global-Investment-Institute.com

In The News:

7 Vanguard High-Dividend Mutual Funds to Own  U.S News & World Report Money
The 25 Best Mutual Funds of All Time  Kiplinger's Personal Finance
Donate stocks  Doctors Without Borders

Analyzing Growth Stocks: An Important Focus For Any Investor

Analyzing growth stocks is an important focus for any investor.... Read More

How to Read an Annual Report

Every publicly traded company is required by the SEC(Securities and... Read More

My Stock - Right or Wrong

We all know the expression, "My country, right or wrong",... Read More

Dividend Reinvestment Plans: Investing on Automatic Pilot

If you're like many investors who squander those small dividend... Read More

Hedge Fund Advertising

Have you seen all those big full page ads for... Read More

3 Components Needed for Beating the Market

Time to look back2004 is over, now we are in... Read More

Time Out

Are you paying any attention to your retirement savings? Do... Read More

Why Stock Is More Risky Than Options!

You probably have been told that options are risky. Even... Read More

Price to Earnings Ratio - P/E

After finding the price of a particular stock, usually the... Read More

The Surgeon General

The Surgeon General of the United States says that smoking... Read More

Online Investing & Online Stock & Share Trading: Difficulty in Taking Stop Losses in the Market

This is an extract of an article which was first... Read More

?Fears Only Enemy Is Action?

What a great statement!I just heard someone use it in... Read More

Stock Chart Reading

As an investor you will want to check out any... Read More

Gold Fever

Right now there doesn't seem to be any "gold fever".... Read More

The Problem With Hedge Funds

Are hedge funds a suitable investment for you? Hedge funds... Read More

How to Pick Winning Stocks

There is nothing more exciting than finding an undervalued stock... Read More

Acapulco - The Stock Market Dives

There is a famous cliff on the ocean in Acapulco... Read More

Dont Ask Your Broker

Unfortunately, most of you who are reading my column are... Read More

Inverted Interest Rates

Inverted interest rates? What's that? Who cares? Even if you... Read More

Trading For A Living

How many times have you said to yourself, "I'd like... Read More

How To Make, And Keep, Money Trading Stocks

If you are serious about making and keeping money by... Read More

Investment Discipline

One of the great "secrets" of successful people is discipline... Read More

Making a Stock Watch List

I am taking the time to help others learn the... Read More

Inertia Syndrome

When it comes to buying a stock or mutual fund... Read More

Enron Cure

Let's hope you did not have any of the Enron... Read More