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Financial Basics, Tutorial #4 Mutual funds, maybe

This video tutorial is available for watching at YouTube or here for free. My YouTube name is Featureman.

Mutual funds are a good way to invest when you are starting out, but be careful. "Window Dressing" is what some mutual fund managers will do to try to make their fund holdings look like smart purchases. For mutual fund investors I recommend Exchange Traded Funds with no load and low expense ratios. You can find that information for most funds at good free financial sites. Research before buying. There are many types of funds and they are in many different sectors. Research before you buy.

Year after year some funds will do poorly and some will do well. Often last years losers will become the darlings of current world economies. Do not be too quick to buy or sell trying to jump on a bandwagon.

Big Load Mutual funds often have a big "load." That means in some cases there is a fee that is deducted from your investment before your money goes to work (front load). Sometimes the load is a fee that is deducted when you sell your fund (back load). It might be 2 or 3 or even 5% of your investment which never works for you. Each fund has an Expense Ratio. Check that number when you compare funds. Do not listen to anyone who tells you their fund has a load but is better than no load funds. If two funds make the same percentage and one has a load and one does not, the no load is better for you. Study load and no load funds.

Dream big, but invest with caution

Chef Beware of "Window Dressing." Some mutual funds will sell their stocks which lost money, just before they send out their quarterly report. They will replace those stocks with stocks which did well during the period. They are trying to make investors believe they had the winning stocks all along. Learn about window dressing for mutual funds at any good financial page.