Welcome to the latest series on JosephSangl.com – "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.
- I view my investments as money that I will not touch for at least five years.
- 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.