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10 Best Mutual Funds Of November 2022 & How To Invest In Them

Written by Than Merrill
| Reviewed by Nick Hartegan

There may be no rule in the investing community that carries more weight than diversification. Diversification may simultaneously reduce one’s exposure to risk while increasing their chances of investing in a lucrative opportunity. Proper diversification can be just as challenging as finding the next great “multi-bagger.” Proper diversification requires a mind for due diligence and a penchant for translating everything the market has to say for the foreseeable future; that, or a mutual fund. Mutual funds do the heavy lifting for today’s investors so that they don’t need to be professionals themselves. If for nothing else, the best mutual funds to invest in award investors of every level the ability to invest like a professional.

The 10 Best Mutual Funds To Buy Now (November 2022)

When picking the best mutual funds to invest in, there isn’t a single, objective winner. Intrinsic value can’t be placed on risk and peace of mind. For example, investors on the verge of retirement will value risk-averse money market funds over their riskier, higher-yielding counterparts. On the other hand, younger investors with a longer investment horizon will prefer equity funds. Therefore, to pick the best mutual fund to invest in, investors must first get their own priorities in order.

Here are 10 of the best mutual funds investors should consider:

  1. T. Rowe Price Blue Chip Growth (TRBCX)

  2. T. Rowe Price Value Fund, Inc. (TRVLX)

  3. Brown Advisory Sustainable Growth Fund (BIAWX)

  4. Holbrook Income Fund Class I (HOBIX)

  5. Principal Blue Chip Fund Class A (PBLAX)

  6. Fidelity Blue Chip Growth K6 Fund (FBCGX)

  7. Fidelity Advisor Series Equity Growth Fund (FMFMX)

  8. Vanguard Windsor II Fund Investor Share (VWNFX)

  9. Fidelity Advisor Technology Fund Class A (FADTX)

  10. Federated Hermes Strategic Value Dividend Fund Class A Shares (SVAAX)


[ Want to learn what Active vs. Passive Income looks like for stock investors like you? Find out how you can take advantage of Passive Stock Investing in our FREE webinar! ]


best mutual fund

T. Rowe Price Blue Chip Growth

One of the best growth and income mutual funds is the T. Rowe Price Blue Chip Growth Fund. The fund invests most of its net assets into large and medium-sized blue-chip stocks. As blue-chip stocks, the majority of the fund’s holdings have a proven track record and seem to offer a good mixture of risk versus reward for patient investors.

The T. Rowe Price Blue Chip Growth Fund’s top 10 holdings include:

  • Microsoft Corp: 12.43%

  • Amazon.com Inc: 10.73%

  • Apple Inc: 9.77%

  • Alphabet Inc Class C: 9.63%

  • Tesla Inc: 5.45%

  • UnitedHealth Group Inc: 4.58%

  • Visa Inc Class A: 3.07%

  • Meta Platforms Inc Class A: 2.83%

  • Mastercard Inc Class A: 2.31%

  • Eli Lilly & Co: 2.22%

In return for having their money professionally managed by the T. Rowe Price Blue Chip Growth Fund, investors will be required to pay a 0.54% management fee with an expense ratio of 0.69%.

Year-to-date trailing total returns of the T. Rowe Price Blue Chip Growth Fund are underperforming their S&P 500 counterparts, -37.42% and -23.87%, respectively. The fund’s underperformance is due mainly to its exposure to the technology industry, which has sold off in an increasingly inflationary environment. That said, this particular mutual fund is focused on long-term gains and looks well-positioned to weather the short-term volatility. If anything, today’s weakness looks like a great opportunity to add to a proven winner with a bright future.

T. Rowe Price Value Fund

As its name suggests, the T. Rowe Price Value fund seeks to offer investors long-term value by investing in some of today’s most undervalued stocks. In doing so, this particular mutual fund invests at least 65% of its total assets in equities it deems undervalued. The T. Rowe Price Value Fund made the “Best Mutual Funds to Buy Now” list because of today’s inflationary environment. The valuable nature of the fund will provide shelter in a market where just about everything seems overpriced. Perhaps even more importantly, it looks well-positioned to help investors at a time when a recession looks more and more likely.

The T. Rowe Price Value Fund’s top 10 holdings include:

  • T. Rowe Price Gov. Reserve: 7.37%

  • Becton, Dickinson and Co: 4.29%

  • Elevance Health Inc: 4.02%

  • Southern Co: 3.58%

  • Alphabet Inc Class C: 3.25%

  • Johnson & Johnson: 2.86%

  • Bank Of America Corp: 2.86%

  • Exxon Mobil Corp: 2.85%

  • Wells Fargo & Co: 2.71%

  • Philip Morris International Inc: 2.62%

In return for having their money professionally managed by the T. Rowe Price Value Fund, investors will be required to pay a 0.55% management fee with an expense ratio of 0.65%.

Year-to-date trailing total returns of the T. Rowe Price Value Fund are outperforming their S&P 500 counterparts, -20.15% and -23.87%, respectively. The fund is doing better than the overall S&P 500 because of its significant allocation to value stocks. Perhaps even more advantageous to its respective investors, however, is the fund’s affinity for stocks with strong cash flow. In addition to being undervalued, many of the fund’s holdings have healthy balance sheets that should help them survive the upcoming rate hikes. As rates increase, many of the companies in the T. Rowe Price Value Fund will be able to rely on their own capital instead of borrowing at higher costs, effectively giving them an advantage in the market.

Brown Advisory Sustainable Growth Fund

The Brown Advisory Sustainable Growth Fund intends to make investing in ESG (environmental, social, and corporate governance) companies more accessible to the public. If for nothing else, ESG is growing in popularity and starting to develop a pretty good track record. While still in its early stages, ESG seeks to make business decisions based on socially acceptable environmental, social, and corporate governance criteria. Consequently, the Brown Advisory Sustainable Growth Fund prioritizes companies who place an emphasis on ESG.

The Brown Advisory Sustainable Growth Fund’s top 10 holdings include:

  • UnitedHealth Group Inc: 5.10%

  • Danaher Corp: 4.83%

  • Microsoft Corp: 4.68%

  • Visa Inc Class A: 4.57%

  • American Tower Corp: 4.48%

  • Alphabet Inc Class A: 4.28%

  • Intuit Inc: 4.12%

  • Thermo Fisher Scientific Inc: 4.08%

  • Amazon.com Inc: 3.78%

  • Verisk Analytics Inc: 3.53%

In return for having their money professionally managed by the Brown Advisory Sustainable Growth Fund, investors will be required to pay a 0.55% management fee with an expense ratio of 0.8%.

Year-to-date trailing total returns of the Brown Advisory Sustainable Growth Fund are underperforming their S&P 500 counterparts, -32.81% and -23.87%, respectively. For the most part, the fund’s lack of returns is directly correlated to the current state of the ESG industry. Most notably, the Brown Advisory Sustainable Growth Fund pays less attention to the current market and focuses more on secular tailwinds. In doing so, the fund is particularly volatile but should prove to be a winner over the long run. By focusing on investing in the future of ESG, the fund sacrifices near-term profits for long-term gains.

Holbrook Income Fund Class I

This particular fund has developed a reputation for preserving capital in a market with rising interest rates. In doing so, HOBIX invests the majority of its capital in fixed-income instruments like closed-end investment companies and exchange-traded funds that invest primarily in income-producing securities. As a result, most investors look at HOBIX as a short-term investment.

The Holbrook Income Fund’s top 10 holdings are:

  • Charah Solutions Inc 0%: 3.10%

  • Ready Capital Corp. 0%: 2.85%

  • Holbrook Structured Income I: 2.72%

  • W & T Offshore Inc. 9.75%: 2.19%

  • Talos Prodtn Inc 12%: 2.00%

  • MidCap Financial Investment Corp 5.25%: 1.95%

  • Trinity Capital Inc. 0%: 1.95%

  • Alliance Resource Operating Partners: 1.91%

  • Gladstone Capital Corporation 5.125%: 1.90%

  • Pennantpark Floating Rate Capital Limited 4.25%: 1.81%

In return for having their money professionally managed by the Holbrook Income Fund, investors will be required to pay a 0.80% management fee with an expense ratio of 1.1%.

Year-to-date trailing total returns of the Holbrook Income Fund are beating their S&P 500 counterparts, -2.68% and -16.14%, respectively. This mutual fund is a high-risk/high-reward opportunity that works under inflationary pressure. As a result, look at this fund as a short-term play while the Fed is comfortable raising the benchmark interest rate.

Principal Blue Chip Fund Class A

The Principal Blue Chip Fund Class A mutual fund is considered by many to be one of the best mutual funds to invest in. As a large-growth mutual fund, PBLAX is recommended for investors with long-term investment horizons. To grow capital over long periods of time, PBLAX invests most of its capital in companies with large market capitalizations. More specifically, however, this mutual fund will prioritize long-term investments in “blue chip” stocks.

The Principal Blue Chip Fund’s top 10 holdings are:

  • Microsoft Corp: 10.02%

  • Amazon.com Inc: 8.33%

  • Alphabet Inc Class C: 5.34%

  • TransDigm Group Inc: 5.24%

  • Visa Inc: 5.01%

  • Brookfield Asset Management Inc: 4.99%

  • Mastercard Inc: 4.99%

  • American Tower Corp: 4.74%

  • Danaher Corp: 4.22%

  • Adobe Inc: 3.71%

In return for having their money professionally managed by the Principal Blue Chip Fund, investors will be required to pay a 0.59% management fee with an expense ratio of 0.92%.

Year-to-date trailing total returns of the Principal Blue Chip Fund are underperforming their S&P 500 counterparts, -34.66% and -23.87%, respectively. With about a quarter of the fund’s assets in the technology sector, current shareholders may be disappointed with its performance in 2022. However, those looking to start a position in a great long-term mutual fund will find the Principal Blue Chip Fund’s price attractive. Investors should expect volatility in the short term because of inflation, but tech stocks have sold off so much that their valuations are getting better and better with each passing day.

Fidelity Blue Chip Growth K6 Fund

One of the best mutual funds for long-term growth is the Fidelity Blue Chip Growth K6 Fund. With Apple, Amazon, Microsoft, Alphabet, and NVIDIA as its top holdings, this mutual fund obviously favors quality and longevity. Participating investors can expect relatively safe investments with a lot of growth potential.

The Fidelity Blue Chip Growth K6 Fund’s top 10 holdings are:

  • Apple Inc: 11.26%

  • Microsoft Corp: 7.22%

  • Amazon.com Inc: 6.40%

  • NVIDIA Corp: 4.72%

  • Tesla Inc: 4.49%

  • Alphabet Inc Class A: 4.37%

  • Marvell Technology Inc: 3.47%

  • Meta Platforms Inc Class A: 2.85%

  • 2.01%

  • Lowe’s Companies Inc: 1.85%

In return for having their money professionally managed by the Fidelity Blue Chip Growth K6 Fund, investors will be required to pay a 0.45% management fee with an expense ratio of 0.45%.

Year-to-date trailing total returns of the Fidelity Blue Chip Growth K6 Fund are underperforming their S&P 500 counterparts, -37.29% and -23.87%, respectively. With more than forty percent of the fund’s assets firmly situated in the tech sector, 2022 hasn’t been kind to shareholders. However, many of the headwinds impacting the stocks in the Fidelity Blue Chip Growth K6 Fund are short-term. Shareholders should expect volatility as long as inflation is weighing down tech, but the strength of the tech holdings will most likely prevail over the next several years.

Fidelity Advisor Series Equity Growth Fund

Another fund dedicated to long-term growth, the Fidelity Advisor Series Equity Growth Fund seeks out stocks with large market caps and plenty of room for growth. As a result, 97.88% of the fund’s capital is dedicated to stocks, 8.82% of which are foreign holdings. With $858 million in assets and a return of 13.01% since its inception in 2014, FMFMX looks like a good bet for growth-minded investors with long-term investment horizons.

The Fidelity Advisor Series Equity Growth Fund’s top 10 holdings are:

  • Microsoft Corp: 11.22%

  • Alphabet Inc Class A: 6.75%

  • UnitedHealth Group Inc: 5.59%

  • Amazon.com Inc: 5.25%

  • Apple Inc: 4.72%

  • Vertex Pharmaceuticals Inc: 2.77%

  • Adobe Inc: 1.98%

  • Coca-Cola Co: 1.78%

  • Universal Music Group NV: 1.63%

  • Reliance Industries Ltd: 1.59%

In return for having their money professionally managed by the Fidelity Advisor Series Equity Growth Fund, investors won’t have to pay a management fee or expense ratio.

Year-to-date trailing total returns of the Fidelity Advisor Series Equity Growth Fund are underperforming their S&P 500 counterparts, -26.41% and -23.87%, respectively. Yet another mutual fund being held back in 2022 by a significant tech allocation, the Fidelity Advisor Series Equity Growth Fund will look to weather the high interest environment and come out on the other end even stronger. With headwinds set to be short-term, the Fidelity Advisor Series Equity Growth Fund looks like one of the best mutual funds to invest in now.

Vanguard Windsor II Fund Investor Share

Classified as a “large value” mutual fund, Vanguard Windsor II Fund Investor Share seeks out stocks that appear to be trading at a value to their large-cap competition. This mutual fund puts most of its $51 billion in net assets in the top 70% of the capitalization of the U.S. equity market. Holdings suggest the Vanguard Windsor II Fund is built for long-term capital appreciation and income, and it has kept its promise since 1985.

The Vanguard Windsor II Fund’s top 10 holdings are:

  • Microsoft Corp: 5.29%

  • Alphabet Inc Class A: 2.75%

  • Medtronic PLC: 2.12%

  • Johnson & Johnson: 2.03%

  • Procter & Gamble Co: 1.77%

  • UnitedHealth Group Inc: 1.69%

  • Wells Fargo & Co: 1.67%

  • Amazon Inc: 1.51%

  • Elevance Health Inc: 1.50%

  • Honeywell International Inc: 1.45%

In return for having their money professionally managed by the Vanguard Windsor II Fund, investors will be required to pay a 0.33% management fee with an expense ratio of 0.34%.

Year-to-date trailing total returns of the Vanguard Windsor II Fund are beating their S&P 500 counterparts, -21.72% and -16.14%, respectively. With more defensive holdings than the other funds on this list, the Vanguard Windsor II Fund has been able to outperform the S&P 500 at this point in 2022. Despite its defensive allocations, this fund still aims for high returns over long periods.

Fidelity Advisor Technology Fund Class A

One of the best mutual funds to buy now is the Fidelity Advisor Technology Fund. As its name suggests the Fidelity Advisor Technology Fund Class A mutual fund invests primarily in the technology industry. As a result, this mutual fund is less diversified than the others on the list but may carry more upside. The majority of FADTX’s $3 billion in net assets are dedicated to 49 tech stocks with a lot of potential.

The Fidelity Advisor Technology Fund’s top 10 holdings are:

  • Apple Inc: 25.25%

  • Microsoft Corp: 18.64%

  • NVIDIA Corp: 5.39%

  • Mastercard Inc Class A: 4.86%

  • Marvell Technology Inc: 4.43%

  • NXP Semiconductors NV: 3.19%

  • ON Semiconductor Corp: 2.69%

  • Salesforce: 2.66%

  • Cisco Systems Inc: 2.25%

  • GLOBALFOUNDRIES Inc: 1.88%

In return for having their money professionally managed by the Fidelity Advisor Technology Fund, investors will be required to pay a 0.52% management fee with an expense ratio of 0.97%.

Year-to-date trailing total returns of the Fidelity Advisor Technology Fund are underperforming their S&P 500 counterparts, -37.69% and -16.14%, respectively. Despite its recent performance, however, the Fidelity Advisor Technology Fund appears well-positioned to deliver on its promise: long-term capital appreciation. The heavy allocation to tech will weigh it down in the short term, but the strength of holdings will prevail for years down the road.

Federated Strategic Value Dividend Fund

On the list of today’s best mutual funds to invest in, the Federated Strategic Value Dividend Fund may be what investors are looking for to shelter capital in an inflationary economy. If for nothing else, this particular mutual fund aims to provide investors with dependable income and long-term capital appreciation. With the majority of the fund’s holdings in healthcare, utilities, energy, consumer staples and financials, investors will be able to weather a slowing economy more than their growth-oriented counterparts. Most of the fund’s holdings should hold up well over the course of a recession, and the dividends should provide capital at a time when cash is hard to come by.

The Federated Strategic Value Dividend Fund’s top 10 holdings are:

  • Gilead Sciences Inc: 4.15%

  • Philip Morris International Inc: 4.01%

  • Verizon Communications Inc: 3.99%

  • British American Tobacco PLC: 3.85%

  • TotalEnergies SE: 3.85%

  • Southern Co: 3.18%

  • BCE Inc: 3.13%

  • Enbridge Inc: 3.12%

  • Duke Energy Corp: 2.88%

  • Amgen Inc: 2.87%

With an expense ratio of about 1.06% and a management fee of 0.75%, the Federated Strategic Value Dividend Fund isn’t exactly one of the most cost-efficient vehicles for building wealth, but the 4.20% distribution yield may justify the expenses and relative safety.

Despite its holdings, the fund’s trailing total returns year-to-date are down 5.9%. While no investor should be encouraged by negative returns, the Federated Strategic Value Dividend Fund has drastically outperformed the S&P 500’s trailing total returns. Thanks to the dividends awarded to investors, income was distributed despite the fund being down on the year.

What Are Mutual Funds?

In their simplest form, mutual funds are professional money managers who make investments on behalf of their clients. More specifically, these funds are investment vehicles that allow investors to pool their money to invest in several securities. Instead of each investor choosing which securities to invest in, however, professional money managers associated with the fund will split up the collectively pooled capital and divide it amongst a predetermined “basket” of stocks, bonds, money market instruments, and similar assets.

The securities each mutual fund chooses to invest in are directly correlated to a benchmark or goal the money manager hopes to achieve. Some funds, for example, will prioritize growth stocks for investors with long investment horizons; others may choose to hedge their bets and reduce their exposure to risk for those on the brink of retirement. Case in point: There’s typically a mutual fund to fit any investment strategy.

Realizing mutual fund profits isn’t all that different from investing in individual stocks. Investors will be paid out based on the growth of the securities in the mutual fund. That said, the collective nature of a mutual fund will disperse earnings between the fund’s participants based on the percentage of the initial investment. Since mutual funds are a collective pool of capital, each shareholder will benefit or lose equally (based on the size of their original investment).

Due, in large part, to professionally managed portfolios, mutual funds are a great way for novice investors to get a feel for the stock market and other similar securities. Enlisting the services of a professional money manager and someone who is most likely more adept at the ebbs and flows of Wall Street can be a smart move for someone who is otherwise unfamiliar with the stock market. Subsequently, the passive nature of mutual funds is a great benefit for anyone looking to remove themselves from the decision-making process of managing a portfolio. For a fee, of course, mutual funds may serve as the “one-stop-shop” for investors who aren’t comfortable (or don’t have the time) managing their own investments.

Types Of Mutual Funds

Mutual funds operate in a wide variety of asset classes and even across several equities. Some funds focus solely on the stock market, whereas others may prefer a more balanced portfolio with less risk exposure. Either way, it’s important to know that mutual funds may invest in several securities. Consequently, there are numerous types of mutual funds:

  • Equity Funds: As their name would lead investors to believe, equity funds primarily build their portfolios around equities (otherwise known as stocks). Simply put, equity funds invest primarily in a wide variety of traditional stocks. The types of stocks each equity fund invests in, however, will depend on the fund itself. If for nothing else, equity funds tend to specialize in certain categories of stocks. It has become commonplace for funds to focus on businesses of a certain size:  small-, mid-, or large-cap. However, others may invest primarily in foreign stocks, dividend stocks, or even those with a propensity for high risk, high reward. All things considered, there are several different types of equity funds because there are many different types of stocks.

  • Fixed-Income Funds: Mutual funds in the fixed-income category tend to specialize in investments with predictable income. Government bonds, corporate bonds, and other debt instruments, for example, promise a set rate of return at a predictable date. Therefore, fixed-income bonds will build portfolios around scheduled income. These funds tend to correspond with lower returns, but they don’t expose investors to as much risk. As a result, fixed-income funds are usually best reserved for people nearing retirement.

  • Index Funds: Growing more popular with each passing year, index funds attempt to mimic the returns of today’s most popular indices: the S&P 500, the Dow Jones Industrial Average (DJIA), the NASDAQ—to name a few. By buying stocks that correspond with a major market index, these funds will produce returns similar to the entire index itself. As a result, index funds are best left for cost-sensitive investors who are content keeping pace with a particular index and not beating it.

  • Balanced Funds: As the most diversified of all mutual funds, balanced funds specialize in investing in assets across several classes. A balanced fund, for example, will combine stocks with fixed-income investments like bonds. In doing so, balanced funds tend to trade a high upside for diversified protection. Holding several classes of assets reduces the fund’s exposure to risk. However, the concept of the hedge also limits the upside.

  • Money Market Funds: These funds have developed a reputation for safe, dependable returns. In fact, the returns associated with money market funds are so safe that the returns are comparable to a savings account. By investing primarily in government Treasury bills, returns are all but guaranteed, significantly reducing risk and upside. That’s not to say returns are guaranteed in a money market fund, but rather that these funds are the safest on this list.

  • Income Funds: Not unlike fixed-income funds, income funds focus on income-producing assets. However, while fixed-income funds can invest in both bonds and other debt instruments, income funds tend to stick to government and high-quality corporate debt. By holding the debt of promising companies or local municipalities until maturation, income funds award investors with steady cash flow.

  • International & Global Funds: Global funds invest in assets scattered across the entire globe. For example, a global fund will grant investors exposure to foreign markets and those in their home country. On the other hand, international funds invest exclusively in assets outside of the investor’s home country. These funds award great diversification but can expose investors to more volatility.

  • Specialty Funds: Specialty funds are hard to place in a single category, as they are typically made up of assets spanning all of the funds on this list. In other words, specialty funds don’t limit themselves to a specific type of investment. A specialty fund, for example, may invest in bonds and foreign assets at the same time. More often than not, however, specialty funds tend to focus on a single segment of the economy at a time and evolve along with the economy itself.


[ Want to learn what Active vs. Passive Income looks like for stock investors like you? Find out how you can take advantage of Passive Stock Investing in our FREE webinar! ]


how to invest in mutual funds

Average Mutual Fund Returns

Average mutual fund returns will vary between each type and the timeframe being used to calculate returns. Equity funds, for example, tend to concede with higher returns but are slightly riskier than their counterparts over long periods of time. On the other hand, money market funds have become synonymous with notoriously low returns, but the risk is almost irrelevant. Returns share a direct correlation with risk. While there are exceptions, riskier funds tend to reward investors with higher returns. Consequently, funds with little exposure to risk are less rewarding. As a result, investors will want to determine how much risk they are comfortable taking on to determine acceptable returns.

Investors comfortable with the risk associated with equity funds should be happy with a return somewhere in the neighborhood of 8.0%-10.0% over about 10 years. However, those who are more risk-averse should aim for the 4.0%-5.0% return associated with fixed-income funds.

Which Mutual Funds Give The Best Returns?

Historically, every type of mutual fund has combined to provide investors with relatively dependable returns. As recently as 2019, in fact, “mutual funds in seven broad categories have averaged a return of roughly 13%, more than double the average annual return over the past 15 years,” according to Kent Thune at The Balance. Nonetheless, one type of fund stuck out from the rest: large-cap equity funds. “U.S. large-cap stock funds have been the best performing category of the seven we looked at, and short-term bond funds, the worst,” said Thune.

However, it needs to be noted that it’s not enough for investors to evaluate mutual funds based solely on returns; they need to simultaneously consider their investing window and acceptable risk tolerance. In addition to personal preferences, investors also need to consider management fees, the fund’s track record, and even the money managers themselves. These things need to be considered when trying to determine the best mutual funds to buy now.

How To Choose The Best Mutual Fund To Invest In

With several types to choose from, mutual funds can intimidate even the most veteran of investors. The sheer variety is enough to cause anyone to second guess their investment decision. That said, there’s no reason to panic. If for nothing else, people have been investing in mutual funds with a high degree of success since they were founded. Subsequently, they have paved the way for the rest of the investing world with a series of logical steps.

To make investing in your first mutual fund easier and less scary, follow these steps:

  • Identify Your Goals & Risk Tolerance

  • Choose A Style & Fund Type

  • Understand The Different Fees & Loads

  • Choose Active Or Passive Management

  • Research Past Results

  • Focus On What Matters

Identify Your Goals & Risk Tolerance

Mutual funds were designed to cater to specific investors. As a result, there’s a fund for just about every type of investor out there. Therefore, instead of choosing a fund immediately, take a look at your investment goal and time horizon. For instance, a person who is saving for retirement or a child’s college education will have a different time horizon compared to another person who is saving for a down payment on a house (the latter typically has a shorter time horizon.) Second, your investment goal can determine how aggressively or conservatively you want to invest. One person who simply wants growth for their money may choose a more aggressive fund, while a person who is saving up an emergency fund may choose a conservative approach.

If you have multiple savings goals, then one helpful strategy is to divide your investments into buckets. One bucket could be designed strictly for growth, while another bucket could be set aside as your emergency fund.

Choose A Style & Fund Type

Once you have identified your goals and risk tolerance, choose the type of fund that best suits your needs. Again, there are several types of mutual funds, and which one works for you will depend on the previously discussed goals and risk tolerance.

Investors nearing retirement will want to look to lock in returns as much as possible. With fewer years to make up for any mistakes, more secure returns hold a higher priority. The closer one gets to retirement, the fewer risky investment options one should have in their portfolio, and mutual funds are no exception. Likewise, older investors will want to reduce their risk of exposure and secure more income. For example, fixed-income and money market funds are a great complement to a retired investor’s portfolio.

Younger investors, on the other hand, are granted the benefit of time. With a longer investment horizon, younger investors can take on more risk in exchange for higher returns. Equity funds—particularly small and medium cap funds—grant investors the opportunity to compound returns almost exponentially in the right portfolios.

Understand The Different Fees & Loads

Mutual funds are directed by professional money managers, meaning someone else will be doing the investing for contributors to the fund. That said, nothing comes for free. To enlist the services of the fund, investors will need to pay fees and loads. Fees are universal, but how they are changed from mutual fund to mutual fund can vary. More often than not, those fees can be classified in one of two ways: annual operating fees and shareholder fees.

Annual operating fees (expense ratios) are an annual percentage of the funds under management. The more money the fund manages, the more the annual operating fee will be. It is common for the expense ratio to range between 1.0% and 3.0%. Funds will typically use this money to pay advisory or management fees and administrative costs.

Shareholder fees are incurred when shareholders decide to either buy or sell. These actions aren’t free and may be applied either at the purchase or sale of assets (depending on the shares’ class. Fund contributors will incur sales costs, commissions, and redemption fees anytime they buy or sell.

Loads, on the other hand, determine when fees will be incurred. Front-end loads, for example, witness the fund take the commission out of the initial investment, and back-end loads will incur charges at the time of a sale. Loads can make a difference in the number of fees investors incur, so they need to be considered when deciding how long the investment will be. Upfront fees, for example, are not well suited for short-term investments. Back-end loads, on the other hand, work well for investors with long time horizons.

Choose Active Or Passive Management

Next, investors will need to decide if they prefer an active or passive management style. That’s not to say whether or not the investor themselves will be actively involved in making decisions, but rather what the money manager will be making their decisions based on.

As their names suggest, actively managed mutual funds come complete with managers who make all of the investment decisions. The managers will actively choose which securities and equities best represent their clients’ needs (the same needs you decided on in the first step on this list). At this time, active managers will mind due diligence and compile an investment portfolio worthy of your money. More importantly, active managers always seek to outperform the major indices.

Not surprisingly, passive management takes less of a “hands-on” approach. Instead of a money manager actively managing your money, they will invest it in an index fund and attempt to match the index’s returns. As a result, passive funds tend to be a lot more diversified, which reduces risk and returns.

In choosing an active or passive mutual fund, you will once again need to with your risk tolerance with your potential gains. Those with a long-term horizon may want to seek an active money manager who can beat the market. However, some investors may want to play it safe and mimic the major indices’ returns with an index fund.

Research Past Results

When researching the best mutual funds to invest in, it’s always a good idea to look at past performance. After all, there’s no point in giving your money to an incompetent manager. Most mutual funds have a pretty good track record, to be fair, but they are not all created equal. Some mutual funds have a better track record than others, and it’s up to investors to pick the managers they are most comfortable with.

In particular, there are three things investors will want to look at when evaluating a fund’s past results:

  1. Was the mutual fund able to deliver on its promised results in the past?

  2. How volatile was the mutual fund compared to major indices?

  3. How high was the rate of turnover at the mutual fund?

These three indicators will give investors a good look at a mutual fund’s past performance. While they are not all that needs to be considered, they are a great place to start asking questions.

Focus On What Matters

Researching past results will give investors a good idea of how funds operate, but there’s more to today’s best funds than what they have done in the past. In other words, investors won’t make money off of what the fund did before it arrived; they will only make money on the capital they invest moving forward. Therefore, it’s important to look into a fund’s prospects.

In looking to the future, heed the words of Morningstar’s five P’s: Process, Performance, People, Parent, and Price. The investment research company evaluates funds based on these principles and may provide peace of mind for investors. The five P’s help Morningstar evaluate individual investment strategies, the longevity of each fund’s managers, their expense ratios, and other important factors. Their findings can help investors find the best funds to place their money in with confidence. Of course, nothing is ever guaranteed, but professional research from Morningstar is certainly helpful in making a decision.

Summary

To be clear, even the best mutual funds to buy now are incomplete without a diversified portfolio around them. In other words, mutual funds shouldn’t be the sole component of any portfolio but are better suited to complement other holdings. On their own, they are attractive, constant wealth-building machines, but with a complimentary portfolio supporting them, mutual funds become a powerful tool. With the best mutual funds, investors can rest assured their money is in the right hands.


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走地大球亚盘预测 is not registered as a securities broker-dealer or an investment adviser with the U.S. Securities and Exchange Commission, the Financial Industry Regulatory Authority (“FINRA”), or any state securities regulatory authority. The information presented is not intended to be used as the sole basis of any investment decisions, nor should it be construed as advice designed to meet the investment needs of any particular investor. Nothing provided shall constitute financial, tax, legal, or accounting advice or individually tailored investment advice. This information is for educational purposes only is not meant to be a solicitation or recommendation to buy, sell, or hold any securities mentioned.