Free Financial Lessons

Mutual Fund Basics for First Time Investors

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

When you begin to trade, and even after many years of trading, I recommend only to purchase into something which you understand. Which mutual fund is best? The question needs to be which mutual fund is best for you.

There are many types of mutual funds. There are many companies or "families" which have mutual funds available for your investment dollars. There are Sector Funds which are geared to follow the performance of a certain segment of industry or medicine or geographical area. You will find funds which focus on precious metals or energy or transportation. Some Index Funds will be designed to mimic the performance of a stock market such as a Dow 30 Industrial mutual fund or a fund that follows stocks in Hong Kong or maybe a commodity exchange. Study the mutual funds before jumping in. Do not be sold a mutual fund in a one hour meeting.

Train Transportation mutual funds will usually include investments in railroads. They also will have some of their holdings in trucking companies and possibly airlines. Transportation could include car manufacturers or automobile and truck rental corporations in their makeup. The prospectus of the mutual fund should give a lot of information about which areas of industry are in their realm of interest. Many great fortunes have been built and lost in transportation and automotive investments. Transportation is one of many great arenas to consider for your first mutual fund purchase.

Dream big, but invest with caution

Black Gold There are mutual funds which are energy related. Some might include oil and coal and drilling and exploration companies and others might be more risky with speculations in the commodity options markets. Take the time to study before you invest in a mutual fund.

If you have a good fund with a low expense ratio and sound management or a fund that follows an index, you will not have to track your individual stock portfolio each day.