{"id":8997,"date":"2023-01-04T18:22:03","date_gmt":"2023-01-04T16:22:03","guid":{"rendered":"https:\/\/learn.thndr.app\/?p=8997"},"modified":"2024-08-05T10:13:30","modified_gmt":"2024-08-05T08:13:30","slug":"how-to-pick-a-mutual-fund","status":"publish","type":"post","link":"https:\/\/thndr.horizondm.com\/learn\/how-to-pick-a-mutual-fund\/","title":{"rendered":"How to pick a mutual fund"},"content":{"rendered":"\t\t
\n\t\t\t\t\t\t
\n\t\t\t\t\t\t
\n\t\t\t\t\t
\n\t\t\t
\n\t\t\t\t\t\t
\n\t\t\t\t
\n\t\t\t\t\t\t\t\t\t

To assess whether a mutual fund is the right fit for your portfolio, you need to weigh down different factors. Here\u2019s a breakdown of five important questions that you should ask yourself before investing in a mutual fund. Consider them as a \u201cbefore buying in a mutual fund\u201d checklist. Let\u2019s dive right in. <\/span><\/p>\n

What does that mutual fund invest in? <\/span><\/h3>\n

Mutual funds invest in different asset classes – some invest in bonds while others invest in stocks. And each asset class has a different risk level. Hold on. What do you mean by risk? <\/span><\/p>\n

What\u2019s the risk level? <\/span><\/h3>\n

Risk appetite is one\u2019s willingness to take financial risks in hopes of generating potential gains.<\/span> From the very beginning, you should determine your risk level. For instance, are you open to tolerating significant losses in your portfolio\u2019s value for the chance of greater long-term returns? This is a question worth reflecting on. See how risk averse you are and based on that pick a mutual fund that matches your risk level. <\/span><\/p>\n

Generally speaking, mutual funds that invest in fixed-income securities such as bonds are less risky than funds that invest in stocks. <\/span><\/p>\n

Types of mutual funds <\/span><\/h3>\n

There are different types of mutual funds, including: <\/span><\/p>\n

<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t

\n\t\t\t\t\t\t
\n\t\t\t\t\t
\n\t\t\t
\n\t\t\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t
\n\t\t\t\t\t\t
\n\t\t\t\t\t
\n\t\t\t
\n\t\t\t\t\t\t
\n\t\t\t\t
\n\t\t\t\t\t\t\t\t\t

What\u2019s the investment strategy?\u00a0<\/span><\/h3>

When it comes to investment strategies, there are endless possibilities. Yet, one of the most popular strategies is passive investing. The latter is an investment strategy involving purchasing a mix of diversified assets and holding them for the long term. The goal is to maximize returns and make wealth over time by minimizing the buying and selling. In other words, this investment approach follows the old saying: slow and steady wins the race. Mirroring the performance of a specific market index (Eg: EGX30) by investing in an index fund is a common way of following the passive investing strategy.\u00a0<\/span><\/p>

A great way of evaluating a fund\u2019s strategy is to look up the management team. Who wouldn\u2019t want a strong asset manager with a well-backed strategy, right? Also, make sure that the fund\u2019s investment approach is in line with your investment goals\/philosophy.<\/span><\/p>

What\u2019s the fund\u2019s performance?\u00a0\u00a0<\/span><\/h3>

Lastly, research the fund\u2019s overall performance in the past years. Sounds hard? Well, it\u2019s very simple. You\u2019ll look at the fund\u2019s average annual returns- you can find the latter on the asset manager\u2019s website. It can also be useful to look at the fund\u2019s chart, to look at its performance over the past few years, and the rate at which the price fluctuates (aka volatility). However, this is only useful if the mutual fund has been operating for a while.\u00a0<\/span><\/p>

What are the fund\u2019s fees?\u00a0\u00a0<\/span><\/h3>

Some expenses apply when investing in a mutual fund since the latter is managed by professionals. One of the factors to consider when choosing a mutual fund is the management fees. It\u2019s advised to generally invest in a mutual fund with low management expenses.\u00a0<\/span><\/p>

The wrap-up\u00a0<\/span><\/h3>

You can find the answers to all of these questions on the mutual fund\u2019s website or prospectus, which is a document that gives you all the necessary details about a mutual fund such as potential risk and potential reward.<\/span><\/p>

To wrap up, there\u2019s no right or wrong here. A mutual fund might be suitable for your portfolio but not your friend\u2019s. A good strategy would be to put your money in different mutual funds. It\u2019s not this or that\u2013it\u2019s this AND that. Allocating your money to different mutual funds should be based on your preferences and the factors we just mentioned.\u00a0<\/span><\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t

\n\t\t\t\t\t\t
\n\t\t\t\t\t
\n\t\t\t
\n\t\t\t\t\t\t
\n\t\t\t\t
\n\t\t\t\t\t\t\t\t\t
\n\t\t\t\t\t\n\t\t\t\t\t\t\n\t\t\t\t\t\t\n\t\t\t\t<\/i>\t\t\t<\/span>\n\t\t\t\t\t\t\t\t\tPrevious Post<\/span>\n\t\t\t\t\t<\/span>\n\t\t\t\t\t<\/a>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t
\n\t\t\t
\n\t\t\t\t\t\t
\n\t\t\t\t
\n\t\t\t\t\t\t\t\t\t
\n\t\t\t\t\t\n\t\t\t\t\t\t\n\t\t\t\t\t\t\n\t\t\t\t<\/i>\t\t\t<\/span>\n\t\t\t\t\t\t\t\t\tNext Post<\/span>\n\t\t\t\t\t<\/span>\n\t\t\t\t\t<\/a>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<\/div>\n\t\t","protected":false},"excerpt":{"rendered":"

To assess whether a mutual fund is the right fit for your portfolio, you need to weigh down different factors. Here\u2019s a breakdown of five important questions that you should ask yourself before investing in a mutual fund. Consider them as a \u201cbefore buying in a mutual fund\u201d checklist. Let\u2019s dive right in. What does […]<\/p>\n","protected":false},"author":9,"featured_media":8998,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[443],"tags":[89,80,143],"class_list":["post-8997","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-im-an-investor-en","tag-finance","tag-investment","tag-mutual-funds"],"_links":{"self":[{"href":"https:\/\/thndr.horizondm.com\/learn\/wp-json\/wp\/v2\/posts\/8997","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/thndr.horizondm.com\/learn\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/thndr.horizondm.com\/learn\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/thndr.horizondm.com\/learn\/wp-json\/wp\/v2\/users\/9"}],"replies":[{"embeddable":true,"href":"https:\/\/thndr.horizondm.com\/learn\/wp-json\/wp\/v2\/comments?post=8997"}],"version-history":[{"count":1,"href":"https:\/\/thndr.horizondm.com\/learn\/wp-json\/wp\/v2\/posts\/8997\/revisions"}],"predecessor-version":[{"id":16333,"href":"https:\/\/thndr.horizondm.com\/learn\/wp-json\/wp\/v2\/posts\/8997\/revisions\/16333"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/thndr.horizondm.com\/learn\/wp-json\/wp\/v2\/media\/8998"}],"wp:attachment":[{"href":"https:\/\/thndr.horizondm.com\/learn\/wp-json\/wp\/v2\/media?parent=8997"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/thndr.horizondm.com\/learn\/wp-json\/wp\/v2\/categories?post=8997"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/thndr.horizondm.com\/learn\/wp-json\/wp\/v2\/tags?post=8997"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}