Locating a Mutual Fund can be overwhelming if you don’t know where to look. In this post, I’m showing you the three-part approach I use.
Once I have determined the category of mutual funds that meets my criteria, it is time for me to review actual mutual funds. Here’s the three-part approach:
- Mutual Fund Screens – I really like CNN’s Mutual Fund Screener and Morningstar’s Mutual Fund Screener. For example, I used the CNN screener to select Small Growth Diversified Funds that have delivered an average of 10% annual return OR LARGER for the past 10 years. It delivered 36 mutual funds that met that criteria! This really helps me narrow down the search!
- Review Retirement Plan Mutual Funds – If your employer has a retirement plan such as a 401(k), 403(b), Simple IRA, or TSP then be sure to review the options available. My employer has a Simple IRA with American Fund investment options. Usually an employer helps absorb some of the fees or the fees are reduced by the plan administrator. This can really help preserve financial gains!
- Seek Professional Guidance – I meet with a financial advisor about once a year. This professional advice helps me look at my investments with more clarity.
Once I have found funds to look at, I look at the following characteristics of each fund:
- Age of the Mutual Fund I like mutual funds that are older than me!
- Investment Growth I look at the 1, 5, 10, and Lifetime track records.
- $ Needed To Start This is really important for beginning investors.
- The Fund’s Objective This helps me understand the direction of the fund.
I use the CNN Money Snapshot feature to analyze funds. I also like to compare mutual funds to each other using the “Advanced Charts” feature on CNN money.
So that’s just a glimpse into how I choose mutual funds. Many times I end up with a dead end, and I go back to the starting point again to get more mutual funds to compare!