What are mutual funds? Is it good than investing in Banks?
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Mutual funds are a type of investment, where professional managers use your money to buy a variety of stocks (or bonds). It spreads the risk among more diverse investments so they are better than buying a single stock.\n\nIf you mean by investing in banks simply putting your money in the bank and earning interest. Then YES, mutual funds are better than that because banks pay almost no interest.
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A Mutual Fund is a collective fund pooled by an enterprise from the investors having mutual interest. The fund collections shall be invested by the Fund manager in the stocks traded on the exchange. The type & mode of investment made by the Fund Manager shall be made specific to the investors at the time of collecting the amount from them. There are lot of mutual funds availble in the market like Morgan Stanley ... etc.,. The mutual funds are governed by laws of the respective country.
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A stock broker will charge you commission on trades, which may be several percentage points of what you invest.  The commission fees generally make this an unacceptable option when you are investing small amounts of money.  You have to remember with a stock broker that the broker doesn't make money unless he's making trades for your account (unless there is a fee arrangement of some sort).  For small amounts of money, mutual funds are probably more reasonable.  The pros of mutual funds is that they are a generally low-cost way to invest across several different companies, and there are professional investors who get paid well to make good investment decisions.  The cons to mutual funds is that they also charge high fees, generally 1-2% and often have really high turnover which can leave you with a hefty tax bill.  Further, it is proven that professional investors rarely beat the stock indices (S&P 500, Russell 2000, etc) over the long term.  My best advice for you would be to explore low cost ETF (Exchange Traded Funds) products that would give you exposure to the market.  Vanguard is well known for a very low cost fund that tracks the S&P 500, which is roughly the largest 500 stocks by market capitalizaiton.  There are also funds that track bond indices, like the Lehman Aggregate index, but assuming that you are younger, you don't really need to have much exposure to bonds right now.  If you can't invest directly with Vanguard or a similar firm that offers low-cost exposure to the market, then you could open an account with a low-fee online broker like Etrade or Ameritrade and then buy broad market ETFs that track something like the S&P 500, etc.  You would also want to consider putting about 10% of your portfolio (assuming again that you are young) in international stocks, which could also be accomplished through low-cost ETFs.  \nThis probably sounds kind of confusing, but the key point here is that stock brokers and mutual fund companies charge high fees and rarely beat the broad market indices.  If you are being charged 2%, then your fund needs to return 2% more than the market for you to come out ahead.  That's much easier said than done.
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Most of the mutual funds from big names firms are overpriced and underperform. Check out the performance and fees from the fund you bought with its peers. You could use the fund comparison tool at Vanguard.com or one of many discount brokers. I bet you find that Smith Barney takes a big chunk of your investment as fees and commissions and underperforms as well.\n\nread bobbrinker.com website for more unbiased views on investing and no load mutual funds. Also Growth Fund Research Inc. has an incredible recent track record in mutual fund advisory. NO LOADS>
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A mutual fund is something individuals and money managers buy to invest their money.\n\nInvestment banking is class of services provided by banks and large financial institutions primarily to corporations.\n\nThese aren't the same type of thing and cannot be compared in any way.
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www.bankrate.com\n Best mutual fund is subjective to your goals.  That question cannot be answered.
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Vanguard is one of the three largest mutual fund companies in the world (varies between them, Fidelity, and American Funds), they have been around for decades and have nearly $1 Trillion under management.  It is probably the best place to go for someone starting out.  \n\nI used to do consulting for them, while it doesn't seem like the best place to work (low salaries and numbers on the cubicles), they are one of the best mutual fund companies.
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Fidelity was once a legend.  The firm still has a good reputation.  For mutual fund advice you could lok at Morningstar which ranks these funds.  They publish an annual report which is available for $30 or so which compares mutual fund performance by year, location, fund strategy etc.\n\nI wouldn't be surprised if there were mutual funds which tracked Vanguard investments closely but required a much smaller deposit.
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Mutual funds are appropriate for some and the wrong investment for a growing number of people.\n\nFor me, I would NOT invest in mutual funds if it weren't for having a 401K. \n\nOverall, Mutual funds are not good (once you're educated in investing) and many people should not invest in mutual funds unless you have to (like if it were a requirement in a 401K).\n\nHere's why.\n\nFirst of all, mutual funds exist to take average person's money.\n\nSecond, mutual funds seem to be "happy" just to do better than the S&P index, since that's often the gauge. A monkey, yes monkey, can usually outpick most mutual funds. Over 60% of the mutual funds out there can't even outperform the market (CNBC just reported the current # was 72%). That's VERY SAD!\n\nThird, mutual funds have embedded management fees in their costs. Most of these mgmt fees are 0.5% to 2% annually.\n\nFourth, most mutual funds exist not to earn you a lot of money, but are more interested in NOT "losing" you lots of money. That way you stay with them and they continue to collect their fees.\n\nFifth, mutual funds are not as liquid as one might think. If you're in mutual funds and a Bush talks in the morning and you call your broker to sell because the market is now tanking, the broker will gladly take your order, but the order will not be executed until the day is over and the negative impact is already priced into the fund.\n\nSixth, many mutual funds charge extra "fees" if you buy/sell their fund within a certain amount of time, meaning you must keep your money in the fund 90 days to 2 yrs before you're free from the fees (read the fine print on trying to get a withdrawal). These fees can be up to 3% or so of your money as well.\n\nSeventh, mutual funds have to be in the market. So if the market is crashing or going down like it has between May and now, then the funds still have to be in the market and taking those losses too. With some practice, you can time your monies to avoid some of those losses (it'll take practice).\n\nConvinced yet? Need more? \n\nEighth, mutual funds have to be pretty diversified and so if there are hot and cold sectors, they are probably in both the hot sectors and cold sectors. However, as an investor, you can buy into just the sectors you want, like metals, or housing, or energy, etc. or right now, Brokers/Dealers, Retail, and insurance!\n\nNinth, mutual funds are so big, they can only invest in certain companies. A small mutual fund with $10 billion in assets. 1% of that money is $100 million. How many companies are this big where $100 million investment isn't the whole company? Do you want to limit yourself to just those larger companies like Times Warner, Microsoft, home depot, cisco, ebay which have been sideways for years? I think not.\n\nA better way would be to buy ETFs (exchange traded funds) or holders. These trade like stocks, so are very liquid, and do not have the high fees like the mutual funds. Further, you can buy/sell them as you wish. They represent sectors or indexes, so buying them gives you the same diversification as the sector/industry/index, but with much less overhead!\n\nSee Amex.com (american stock exchange) or ishares.com, holders.com for more info. \n\n\nYou need to invest for yourself. If you can't, then sure, use mutual funds. But be aware of the shortcomings (and as you can see, there are many). \n\nLet me know if you have further questions. \n\nBest of luck!
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Here are some websites that will give you a knowledge of how to invest in mutual funds.
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Anytime is a good time to invest in mutual funds, if you take the SIP route.A SIP allos you to benefit from Rupee cost averaging, which means you buy more units when the markets are down & similarly you buy less units when the markets are over-heated.\n\nChoose a good fund based on your risk profile.\nVisit www.valueresearchonline.com to find out the top mutual funds in all categories.\n\nYour fund should be a 4 or a 5 ranker.\n\nAll the best.
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If you are new to market then i would suggest you to go for Mutual fund.\nConcept of mutual funds is simple: You invest the money in mutual fund company, they will invest your money in some other business. They share the returns with you. There are different types of mutual funds- equity, income, debt.....\nYou can choose required one depending on risk taking capacity.\nI suggest you to for SIP- Systematic Investment Plan. Its safer and gets you decent returs.\nYou can logon to http://www.mutualfundsindia.com/ to know more.\nThere are many companies which offer mutual funds like Franklin Templeton, Aditya Birla, Kothari pioneer, SBI, ICICI Prudential...\nAny query you can ask me.\nHappy investing.\n\nCheers,\nJay
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I will try to answer your questions in as short as possible:\n1. how do i start off? -- Visit website like finance.yahoo.com, vanguard.com and read about mutual funds. They have very good and easy to understand information.\n\n2.how much money minimum do i need? -- This depends on the mutual fund company. for example, vanguard asks for $3000 minimum for most funds. At T rowe price you can start with as low as $50, if you sign up for automatic investment plan. \n\n3. where do i buy mutual funds -- you can buy them directly from mutual fund company (ex. vanguard.com, fidelity.com, etc)  or you can purchase them from online broker (schwab.com, ameritrade.com, etc.). Call them up and discuss your investment objectives. These guys are really good and helpful.\n\n4. wat corporation should i invest in? -- its upto you. whatever works best for you. for mutual funds i like vanguard.com and fidelity.com. Both are very investor friendly and they offer some very low expense ration funds.\n\nHope this helps.
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To best grow your money you first need to establish the amount of risk your willing to take. Low risk, get into bonds or money market accounts and expect about 5-6% annually. Mutual funds will offer the full range from 5-20% on average, but the more gain means the more lost. For the most aggressive risk (and therefore gain) play in individual stocks, options or on forex (foreign exchange currency market).\n\nThe most important thing is to spread your money around, don't lump all your capital into one or two stocks, because your setting yourself up to take major losses. Educate yourself before jumping into anything. Investopedia.com is a good resource for that - just remember that they are supported by various brokers and agencies, so take recommendations lightly. They do, however, provide good solid information on the basics.
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Well, like stocks, there are lots of them and not all of them are good investments.\n\nThe costs associated with mutual funds can still be high, even though they are "no-load" stocks (in other words there are still management fees that may be excessive).\n\nA disadvantage of all mutual funds, but which may be an issue with no-loads because people think there is "no-cost" to get into them, is that people may overdiversify (buy too many different kinds of mutual funds).\n\nSome mutual funds, although not restricted to no-loads, may put a lot of your investment aside as "cash equivalents" to allow for liquidity, which means that you could have more of your money not working for you in an investment.
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Buy and hold.  Mutual funds which buy and hold do better on average than those that buy and sell. Most active trading systems sound good, but are based on faulty theories.  When they work, they do so because of luck, not because they are inherently sound.
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ADVANTAGES\n\nWhat are the key advantages of mutual fund investing?\n\nDiversification\n\nUsing mutual funds can help an investor diversify their portfolio with a minimum investment.  When investing in a single fund, an investor  is actually investing in numerous securities.  Spreading your investment across a range of securities can help to reduce risk.  A stock mutual fund, for example, invests in many stocks - hundreds or even thousands.  This minimizes the risk attributed to a concentrated position.  If a few securities in the mutual fund lose value or become worthless, the loss maybe offset by other securities that appreciate in value.  Further diversification can be achieved by investing in multiple funds which invest in different sectors or categories.  This helps to reduce the risk associated with a specific industry or category.  Diversification may help to reduce risk but will never completely eliminate it.  It is possible to lose all or part of your investment.\n\n Professional Management:\n\nMutual funds are managed and supervised by investment professionals.  As per the stated objectives set forth in the prospectus, along with prevailing market conditions and other factors, the mutual fund manager will decide when to buy or sell securities.  This eliminates the investor of the difficult task of trying to time the market.  Furthermore, mutual funds can eliminate the cost an investor would incur when proper due diligence is given to researching securities.  This cost of managing numerous securities is dispersed among all the investors according to the amount of shares they own with a fraction of each dollar invested used to cover the expenses of the fund.  What does this mean?  Fund managers have more money to research more securities more in depth than the average investor.  \n\nConvenience:\n\nWith most mutual funds, buying and selling shares, changing distribution options, and obtaining information can be accomplished conveniently by telephone, by mail, or online.\n\nAlthough a fund's shareholder is relieved of the day-to-day tasks involved in researching, buying, and selling securities, an investor will still need to evaluate a mutual fund based on investment goals and risk tolerance before making a purchase decision.  Investors should always read the prospectus carefully before investing in any mutual fund.\n\nLiquidity:\n\nMutual fund shares are liquid and orders to buy or sell are placed during market hours.  However, orders are not executed until the close of business when the NAV (Net Average Value) of the fund can be determined.  Fees or commissions may or may not be applicable.  Fees and commissions are determined by the specific fund and the institution that executes the order.\n\nMinimum Initial Investment:\n\nMost funds have a minimum initial purchase of $2,500 but some are as low as $1,000.  If you purchase a mutual fund in an IRA, the minimum initial purchase requirement tends to be lower.  You can buy some funds for as little as $50 per month if you agree to dollar-cost average, or invest a certain dollar amount each month or quarter.\n\n \n\nDISADVANTAGES \n\nRisks and Costs:\n\nChanging market conditions can create fluctuations in the value of a mutual fund investment.\n\nThere are fees and expenses associated with investing in mutual funds that do not usually occur when purchasing individual securities directly.\n\nAs with any type of investment, there are drawbacks associated with mutual funds. \n\nNo Guarantees.  The value of your mutual fund investment, unlike a bank deposit, could fall and be worth less than the principle initially invested. And, while a money market fund seeks a stable share price, its yield fluctuates, unlike a certificate of deposit. In addition, mutual funds are not insured or guaranteed by an agency of the U.S. government.  Bond funds, unlike purchasing a bond directly, will not re-pay the principle at a set point in time. \n\nThe Diversification "Penalty."