Question by ThatDude: When buying mutual funds, what are the most important aspects to look at?
Okay, I’m new to investing in funds.
I know a bit here or there, but I’m still learning. I don’t know enough to trust myself jumping into anything yet.
What I’m looking for is long-term stuff, like something for retirement. I’m 22 now so I guess it’s a great time to start.
What is the top parameters I should look for when browsing mutual funds? Like when browsing MorningStar I see NAV and Expense Ratios (I know what they are) but how do I know what is more important? Also, once I know what is important, how do I know if it’s good. I figured you probably want a low expense ratio, but what would you consider “low”?
I guess I just wanna know what to look for in numbers.
Answer by swenjj
look at the long term (10years or more) return of the fund, i like to compare it to others in the downturn years at the beginning of this decade
check the beta and deviation, they can show you how volitile the fund may be
make sure you know what sector it is in, to fit it in your asset allocation
check and see how morningstar rates it, i wouldnt buy into one unless its at least 3 stars, or is too new to be rated
expense ratio is huge
no load/load fund?
also, if it is in a taxable fund you may want to check the turnover, if they are turning stocks over and over it can affect your taxes
see if managment is new, long term results don’t mean a lot if the manager just changed
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