Getting Advice Is For Everyone
Getting some mutual fund advice before buying high yield mutual funds or high yield bond funds is a good idea for people who are not financially sophisticated. But even veteran investors benefit from asking about specific funds because the stock market world, as well as the underlying companies, are fairly tricky beasts.
For example, evaluating the health of a biotechnology fund may not need a PhD, but it does at least require a little due diligence checking up on the quality of the component firms.
A Checklist Of Three Things
When it comes to mutual fund advice, we suggest that there are three things to put onto a check list. First, find a trusted source. Second, confer with your source on how to define your financial objectives. Third, make a plan and run it by your source.
Find One Trusted Source
The first task, to find a trusted source who knows about buying mutual funds, is harder than it sounds. We suggest finding a financially savvy friend or family member who can impart years of wisdom. But, if there is no one like that, then consider hiring an advisor. The caveat is this: the last thing you want to do is to go look up the yellow pages or type into Google the words "financial advisor" or "mutual fund advisor." The reason to be cautious here is that many advisors work off commissions by selling securites. If they can get you to buy something, they make a little extra money. This sets up a conflict of interest because they become more interested in selling you something shoddy and unproven than in watching out for your welfare.
Fee-only Planners
Instead, look for fee-only financial planners. Make sure they are chartered or certified by a professional organization, meaning that they have passed some tests of competence and satisfy basic educational requirements. You can also learn from the veterans about how to use a mutual fund screener so you will not rely on them forever to compare mutual funds.
Define Financial Goals
The second task suggested by our mutual fund advice is to define your financial objectives. Are you young? Then you should consider saving in aggressive instruments with a mix of 80% stock to 20% bond equity. Are you near retirement? Then you should think about moving everything into bonds and getting ready for the tax implications of IRA withdrawals. Every person’s situation is different and the finance world has set up structures to handle your particular goals.
Make A Plan
The third task is to make a plan with your advisor or planner who gives you mutual fund advice. You will have to open up a mutual fund brokerage account who is set up to accept money transfers from your bank account. A minimum amount is required to open a personal account, but the amount can be as low as $1,000 for IRA-only accounts to $3,000 for regular accounts. You will likely also need to set up a bank transfer every month so money is automatically deposited into the fund for investment. Finally, you will have to make some decisions on what mutual funds to buy – is it stocks, commodity mutual funds, top money market funds perhaps?.
There are a number of different kinds of funds, each tailored to a particular financial objective. Look at our site for more information and mutual fund advice on both bonds and stocks.