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Lev
Lev, Tax Preparer
Category: Finance
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Experience:  Personal Investment, Tax Preparation
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Question about mutual funds...

Customer Question

question about mutual funds...
Submitted: 5 months ago.
Category: Finance
Expert:  Lev replied 5 months ago.

Please post your question?

Customer: replied 5 months ago.

Lev

hi

could you tell me a brief overview of how mutual funds work? i wanted to start investing and is this a safe way or could you lose all of your money if a fund company collapses...

thanks

Expert:  Lev replied 5 months ago.

The mutual fund company generally may not collapse - and that is a regulated financial company.

You are buying shares of the mutual fund - and manager is using your investing to purchase shares of other corporations or financial assets (bonds, etc).

Your investments are NOT protected and may loose values - so you need to be very careful in selecting mutual funds and analyzing their performance.

Also - it might be important to select the timing when you purchase certain mutual funds.

While it is possible to victim of a fraud - that is relatively rare - but positive investment results are not guaranteed.

There are several resources to screen mutual funds before purchasing - I will mention just a few

http://online.wsj.com/public/quotes/mutualfund_screener.html

https://screener.finance.yahoo.com/funds.html

http://screen.morningstar.com/FundSelectorAOL.html

https://research.tdameritrade.com/grid/public/screener/mutualfunds/screener.asp?method=new

Please be aware - there are thousand of funds - and selection might be not a simple task.

Questions?

Customer: replied 5 months ago.

i understand, i said i wanted to begin investing, i actually have had a few, funds over the years, what i actually meant was i wanted to begin to find new funds as mine are losing value, do you trust the site named "barchart" for information?

Expert:  Lev replied 5 months ago.

Never used that site...
The most popular source of information and most respective about mutual funds is Morningstar.

Generally - there are two approaches in investing...

You may choose an investment firm - "Mutual Fund Family" - open an account with them - and move funds between funds - usually without any additional charge.
Or you may have an account with a regular broker - and purchase shares of mutual fund - usually there is no transaction fees if shares are held at least six months.

But - again - selection and timing will require some research - and results are never guaranteed.

Customer: replied 5 months ago.

ok i have heard of morning star, does this site give you ratings and performance etc?

Expert:  Lev replied 5 months ago.

Yes - rating and performance data - and analysis as well - but some information might be not free.
Morningstar is an investment research and investment management firm specialized in fund investing.

http://www.morningstar.com/

Expert:  Lev replied 5 months ago.

I appreciate if you take a moment to rate the answer.

Experts are ONLY credited when answers are rated positively.

If you still have any doubts, need clarification - please be sure to ask.

I am here to help you with all tax related issues.

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