Mutual Funds

The Top Mutual Funds & Your Best Investment

The top mutual funds are funds from mutual funds companies that are investor friendly. These top mutual funds are actually easy to find, and are probably the best investment for most people. Here’s how to find funds that work for you and give you a performance advantage year after year.

The top mutual funds offer you an investment advantage year after year and they can prove it. These are your best investment if, like most people, you need help managing your investment assets. I call them investor friendly simply because they do not charge you an arm and a leg when you invest money with them; plus they offer good service and a broad array of investment options.

Mutual funds are sold to investors and managed for them by mutual fund companies or families. Some market their funds through middlemen and pay professional money managers big bucks to actively manage their funds in an attempt to outperform their competitors and/or benchmarks. Then they pay big bucks to advertise. Who pays for all of this? Put another way, do you always get what you pay for?

Since NO mutual fund can prove that it consistently outperforms its competition, it makes no sense to look for the top mutual funds based on past investment performance. Middle- men can cost YOU sales charges of 5% or more off the top when you invest money. Active professional management and high marketing expenses and other services can cost you 2% or more a year to just hold your investment. I don’t call that investor friendly. No, you do not always get what you pay for.

The top mutual funds, in my opinion, work with you and not against you by operating efficiently and honestly while passing the savings on to you. Some of the largest fund companies in America work directly with investors and offer good service at low cost. In my opinion this represents the average investor’s best investment. Simply put, all costs associated with investing work to eat away at your investment earnings. For example, if you can get 2% interest a year at the bank, why pay 3% off the top and more than 1% a year to earn 5% or 6% in a bond fund?

Here’s how to find the top mutual funds that are investor friendly with low costs. Start by going to the internet and searching “no-load funds”. These funds have NO SALES CHARGES or commissions when you invest directly with the fund company. Then go to a couple of the sponsor sites at the top of the page. For example, Vanguard, Fidelity and T Rowe Price will likely be there. They are large mutual fund companies.

Then go to one of these sites and search for INDEX FUNDS. These funds do not actively try to beat their competition or benchmark (which is an index). They simply invest in line with the index to duplicate its performance. By doing this they save on management costs and pass the savings on to you. Since few funds consistently beat their benchmark, and many perform worse, why take a chance and pay extra for active management?

Check out the EXPENSE RATIO of the various index funds a company offers. Since these are no-load funds there are no sales charges, but all funds charge for yearly expenses. For example, you can find stock and bond index funds with expense ratios of less than ½% a year. Basically, that’s your total cost of holding that investment for a year. A low cost of investing gives you higher net profits, and works to your advantage year after year.

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