Choosing Mutual Funds – Part 2

Welcome to the latest series on – "Choosing Mutual Funds"

In this series, I will be sharing how I choose mutual funds.  It should be noted that I do not sell investment products nor am I professional in the mutual fund industry.  This is my own personal philosophy for choosing mutual funds.

In Part One, I reviewed what a mutual fund is.

Part Two – Establish Investment Goals

My personal investment goals guide my mutual fund choices.  First you should know a couple of things about me.

  1. I view my investments as money that I will not touch for at least five years.
  2. I prefer mutual funds over individual company stocks.  I do own one individual company stock, but I will not allow an individual company stock to exceed 10% of my overall portfolio.

My investment goals are GROWTH, GROWTH, and more GROWTH.  I do not need my investments to produce income for me as I am in my early 30s.  I want my money to GROW.  This means that I invest in mutual funds that are purchasing stock of companies that are experiencing major growth (like Google).

Now, if I were retired, I would want my investments to produce income so I would be searching for mutual funds that invest in companies that are paying dividends to its shareholders (like Wal-Mart, Microsoft).

If I were approaching retirement, I would be moving the money that I would need in the next five years to much more stable and secure investments.

In the next part of this series, I will be reviewing the different types of mutual funds.  Knowing one's individual investment goals makes the selection of a mutual fund category much easier.

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My first book, "I Was Broke. Now I'm Not.", was released on January 20th.  It is available via PAYPAL or AMAZON or BORDERS.

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