No Load Mutual Fund Advice
No Load mutual funds
A no load mutual fund a great long-term savings tool. The emphasis is on long-term, no load mutual funds are not for day traders. There is not as much excitement in no load mutual funds, as their is in watching the daily market fluctuations and buying and selling stock. No load mutual funds offer less risk and a greater opportunity for growth over the long term.
No load mutual fund advice In order to minimize risk and increase the opportunity for growth follow a few simple rules;
1. Be committed to a long term investment. Do not put money into a mutual fund that you may need to use in the next ten years. This means you must build a savings that you can fall back on in case any emergencies arise. Typically 3-6 months worth of salary is ideal.
2. Be consistent. Buy additional shares of no load mutual funds on a monthly basis, every month. The best method is to set up an automatic payment to buy additional mutual fund shares each month. This way you buy set dollar value of shares on a regular basis. Doing this will bring into action something called “Dollar Cost Averaging”. When your funds dip in value, and you continue to invest – you are buying at a discount, when the fund goes up, then your invest value increases, but the number of shares is less because they are more expensive. By taking advantage of dollar cost averaging, you can use market fluctuations to your advantage and actually profit from them.
3. Diversify. Even though no load mutual funds are in effect a method of diversification themselves, it is good to further diversify being having more than one fund. You should balance between higher risk funds such as those that specialize in tech, and lower risk funds, such as government and international bond funds. When stocks go up, bonds typically go down and vice versa. It is a good idea to have both types of funds, this way, the principle of dollar cost averaging will allow to profit from these fluctuations, while leveling off the overall change in your portfolio’s value. You can also buy some international funds to balance out domestic funds.
4. If you are comfortable putting off cashing in your funds for a very long-term, take advantage of a 401k or Roth IRA account. Buying funds under the umbrella of either of these retirement investment vehicles, allow you grow your investments tax-free. By taking advantage of these programs, you do not pay taxes on any capital gains your invests make, and you do not pay taxes when you withdraw from these accounts either. This really puts your no load mutual funds on steroids.
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