Guide to Mutual funds for dummies

Mutual funds are very similar to the stock market in terms of the way they invest and make money. The way to look at them is to view them as someone who has your money as well as money of several other investors like you. That money collectively can be a huge some money and that money is invested by the mutual funds in the stock market. 

As a single investor you may not be able to track your stocks on a regular basis and nor can you make a hasty decision to quit a particular stock. On top it you also do not have the knowledge of the stock market movements and the latest stock market news. The mutual fund company does all that for you which will mean that you can actually be assured that they are definitely doing a much better job than you will do. There is no doubt that these companies do a better job and can give much better returns over the long term

These mutual fund companies make money form you by way of charging that management fees by way of entry loads and the exit loads. At the end of each trading day these mutual fund companies will publish the NAV of their schemes. This NAV is the mutual fund equivalent f let us the individual stock price. Based on the NAV you can actually start investing in a particular mutual fund scheme and then exit if you think the NAV is raised. In most cases the mutual fund performance will mirror the stock market.

 That said a large amount of onus is placed on the shoulders of the mutual fund manmaber. It is this mutual fund manager who has the responsibility of investing the large amount of sum that the investors have given. Now that can be a tough task and the skill of the mutual fund manger comes into play here. That is why always check the reputation of the mutual fund manager and then invest. 

Again there are several types if mutual fund in the market and these are abased on the type of stock or the type of industry the scheme will invest in and also whether they will even invest in the stock market or not. 

Just to give you an idea about the type of mutual funds here are the categories as given by Morning star.

Diversified Emerging Markets
Diversified Foreign
Diversified World
Europe
General Intermediate-Term
General Long-Term
General Short-Term
General Ultrashort-Term
Government Intermediate-Term
Government Long-Term
Government Short-Term
International Hybrid
Japan
Large Blend
Large Growth
Large Value
Latin America
Mid Blend
Mid Growth
Mid Value
Muni California Intermediate-Term
Muni California Long-Term
Muni National Intermediate-Term
Muni National Long-Term
Muni New York Intermediate-Term
Muni New York Long-Term
Muni Short-Term
Muni Single State Intermediate-Term
Muni Single State Long-Term
Pacific/Asia
Pacific/Asia (ex Japan)
Small Blend
Small Growth
Small Value
Specialty Precious Metals
Specialty Communications
Specialty Emerging Markets Bond
Specialty Financial
Specialty Health
Specialty High-Yield
Specialty International Bond
Specialty Multisector
Specialty Natural Resources
Specialty Real Estate
Specialty Technology
Specialty Utilities
U.S. Hybrid

While investing in mutual funds consider these things and that are the

Load funds vs. no-load funds

The transaction fees

Portfolio turnover

Beta

Gross dividend yield

Expense ratios

Here are some of the names of the mutual fund companies and families and the list of these top mutual fund companies is getting longer each year.

Fidelity

Vanguard

American

TIAA- Cref

Charles Schwab mutual fund

T Rowe price mutual find

Franklin Templeton mutual fund

Cohen & Steers mutual fund