» Learn the Basics of Mutual Funds » Where to Buy Mutual Funds

Where to Buy Mutual Funds

Mutual funds can be purchased from a variety of sources. Here is a list of some of the financial entities that offer mutual funds.

  • Mutual Fund Companies

    In order to save from commission fees of brokers and dealers, you can go directly to the mutual fund company that offers the mutual fund you are interested in. such funds that are exempt from sales brokers and sales commission are usually referred to as direct-marketed funds (no-load funds).

  • No-Transaction Fee Programs

    Fund supermarkets consolidate shares of many companies and provide you with the opportunity to purchase ones at no sales charge or transaction fee.

  • Wrap Programs or Financial Advisors

    Another option of purchasing a mutual fund is through wrap programs that provide investment advice. The latter is subject to a fee, which is usually a percentage of the assets. Many financial advisors also provide for the option of purchasing a mutual fund in return to a fee.

  • Retirement Plan

    Many employers provide their employees with the opportunity of investing in a mutual fund through the company's retirement plans. However, many retirement plans have a rule regarding the mutual funds you can invest in. The mutual funds offered through your retirement plan are to be used only for retirement purposes.

Selecting the Right Mutual Fund

Now that you have established your financial goals and corresponding objectives, you should decide on the type of mutual fund that best fits them. You should take the following steps:

  1. Make a research and comparison of the different mutual funds available. Take consideration of their performance rates, objectives and expense ratios. Additionally, find more information on the required minimum of initial investment for the opening of the account.
  2. Request a prospectus by the mutual fund company you have selected. In addition, you will receive instructions on investing and redeeming shares and the services offered by the company.
  3. Before starting with the selected mutual fund, allocate sufficient time for the examination of the prospectus so that you acquaint yourself with the specific policies and fees that subsequently may have an effect on your investments.

Once you have taken the previously discussed steps, its time to make the investment in the selected mutual fund. You can do this in one of the following way:

  • By mail (fill in the application and send it with the check for the investment.)
  • Online application (the check is send by mail)

You should make the appropriate arrangements in case you want to make automatic monthly investment, or use the phone, bank wire or the Internet for your further investments.

With your first investment in the mutual fund, you become its shareholder and as such you will receive reports and statements. Reports will be given on dividend paying, distributions made and tax status of the earnings you have with the company.

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