Make money in Mutual Fund

Is the time ripe to buy mutual funds?
Buying mutual funds have never been difficult even considering the complexities involved in it. Mutual funds market has grown big enough in the last decade or so that it has almost always out performed the stock market. This article throws light on:

-How to pick a mutual fund from the huge pool of existing funds?
-When you can sell the mutual funds?
-How much you can earn from mutual funds?

Those of you who are looking to investing money in order that higher returns can be made must have concluded stock market is too hot for you especially so when you are a new and a novice investor. But sulking that you are loosing out on action while others are walking to their banks merrily is not necessary. Take a look at the world of mutual funds. Mutual funds market has grown big enough in the last decade or so that it has almost always out performed the stock market. Yes, there is big money to be made in mutual fund investment too provided you played your cards with aplomb.

How to Buy Mutual Funds?

Buying mutual funds have never been difficult even considering the complexities involved in it. You can buy mutual funds as easily as 1-2-3. Here are the typical steps involved when you want to buy mutual funds
You can buy mutual funds when mutual fund companies make initial public offerings. At this time you will usually have to pay the basic face value and not the market dictated price that includes a premium as in many cases. Filling out an application form with a payment of some initial deposit is all it takes.
Buying mutual funds called closed end funds is from stock exchanges. Closed end funds are initially sold by fund companies in limited numbers and they are listed in a stock exchange to facilitate trading by investors. These will be usually at premium prices or as dictated by demands in the market (higher demands for various reasons attract higher premiums).

Buying mutual funds called closed end funds is from stock exchanges. Closed end funds are initially sold by fund companies in limited numbers and they are listed in a stock exchange to facilitate trading by investors. These will be usually at premium prices or as dictated by demands in the market (higher demands for various reasons attract higher premiums).

You can also buy mutual funds (open end funds - funds purchasable perpetually from the company). Here the price at which you buy will be a figure called as NAV in the industry circles. This term stands for net asset value, a figure that denotes the current value of a share of the company after adding the earnings and deducting the expenses and taxes equally amongst all the number of shares.
How do you mutual funds online? Most companies and banks that are in the mutual funds business facilitate online buying of mutual funds to their customers. They need you to have a trading as well as a demat account and connect your bank account to this. You can log on to a broker's or the company's own trading internet portal to be able to buy online. Once online you can choose from the array of exchange traded mutual funds (ETF) and open end funds too. Your trades will be either credited or debited to your demat account (an account to hold dematerialized shares - electronic form of shares) instantaneously. This is some what like you can transfer funds from your bank account.

What Kind of Funds to Buy and how to pick From a Huge Pool of Existing funds?

Well. It is not easy to pick from a really huge pool of funds. Add to it the spate of new public offers every now and then, to make things worse. But you have your objectives in place. If it is making money, you sure would not want to go to money market funds in a big way.

Stock Funds for Growth

You can bet a good chunk of your money on growth funds such as index funds and sector funds. These are also called as stock funds in a broader sense. Stock funds come in different varieties like index funds that invest and track specific index (S&P, DOWJONES etc) and sector specific funds that invest and track for example automotive sector. Do not pool your entire money in any one fund as it deprives you of growth benefits of other funds.

401 (k) Plans

For retirement plans you can choose from many of the 401 (k) plans. These funds appreciate in value over long periods and carry lesser risk compared to growth funds. It is a tailor made fund for those looking for safer investment for retirement. The advantage here is your employer makes an equal contribution to yours and your contribution is from your before-tax salary. Your account will not be taxed until you withdraw thus paving way for faster growth.

Balanced Funds

Balanced Funds or Managed Funds allocate assets in predetermined proportions among government securities (bonds, T-Bills) for safety and in stocks for rapid growth. Investment in stocks grow rapidly (rapid and higher growth are associated with risks too) while government securities give a sort of cushion with their definite but slow growth. Most funds let you switch allocation for a small fee. Exercise the switch over option when growth falls behind your expectation.