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How to Learn about Mutual Funds

Berkeley Parents Network > Reviews > Legal & Financial Services > How to Learn about Mutual Funds


Jan 2000

I'm interested in recommendations/advice regarding mutual funds. I don't know anything about how they work, where to get them, how much to invest, etc. Any info. would be much appreciated. Thanks. Dylyn


When I was in your position, I asked the same question of Herb Greenberg, formerly a writer in the Chronicle Business Section. He recommended "How to Buy Stocks", by Louis Engel and Henry Hecht. It's a great beginner guide to the stock market. They strongly endorse the view that first-time investors start with a mutual fund before investing in the stock of individual companies. The book is ISBN: 0316353809 and is in stock at http://www.fatbrain.com (boycotting Amazon because of their silly patent). The only downside to the book is that it was last updated (eighth edition) in 1994. Personally, I still highly recommend it. Scott

I've read a large number of investing books and still think one of the first ones I ever read is the best. The title is 'The Only Investment Guide You'll Ever Need' by Andrew Tobias. The back cover describes the book as "a truly understandable, concise, and informative look at the best uses for your money, no matter how much or how little you have." Very accurate description. The author is also very humorous which makes for an enjoyable read (I definitely can't say that about many of the other investment books I've read Kathy

Get more info than you can ever possibly handle online... many many sites to choose from... you might start at www.morningstar.com... when you are ready to invest then open an account at www.schwab.com or www.etrade.com... invest as much as you can as soon as you can and keep saving...join your 401.k or 403.b at work if you have one and make the maximum contribution you can (best tax shelter around besides mortgage interest deduction for home-owners)... if you have left-over money after your 401.k/403.b contribution, then put $2,000 per year into a Roth IRA... In terms of choice of funds, it depends largely on your age. If you are young be aggressive (get into some riskier funds, such as those with Internet stocks). Added risk but chance for big returns. As you age you should become increasingly conservative in your choice of funds/stocks.... try 'socially responsible funds' if you are so inclined... or just go for maximum returns and then tithe... good luck Ben

Regarding the mutual funds question: Mutual funds can be very user friendly and they are much less risky that individual stocks. A great way to learn about mutual funds is to go to any well-lighted bookstore and sit down in front of the financial planning section. A good start might be "Investing for Dummies" (I think that's the actual name!). Another way is to read the business section of the New York Times -- especially on Sunday. Also, I've always found Kiplinger's (monthly financial magazine) to provide relevant, reasonable, and objective info on mutual funds (including the how to's). Most mutual fund companies have informative web sites (Vanguard.com; Fidelity.com; Janus.com; among others). One last thought: I would recommend starting with "no load" mutual funds. A no load fund (e.g. Vanguard, and many others) does not charge a fee to buy or sell shares in the mutual fund. As a result, if you change your mind about the investment or want a different fund, you can get out (sell) at no extra fee. Good luck! Adam

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