Feb 282006

Mutual funds essentially take money from a lot of people and a fund manager invests them. About 80% of funds don’t even match the market in a given year, so it is important that you do your research to get the best returns. Mutual funds offer a great way to invest with relatively low risk and with low maintenance.

You can find excellent mutual fund screeners (for Canada) at www.globefund.com and at www.morningstar.com . Always look up a fund you might be interested in investing. They have to be up to mint otherwise you are essentially losing that money. That opportunity cost of that money that’s only returning maybe 5% real rate of return is more than that.

The key things to look at are the fund’s performance compared to indexes, the ratings. The front and/or back end load fees. The management expense ratio. The rating is also helpful. These all contribute to what your real rate of return will be, especially if you were to pull out your money today. Don’t forget inflation!

For those of you with 100,000 to invest, I would recommend looking up ABC Funds family. If I recall correctly, Michael Irving of ABC Funds actually has an interview with you to make sure you’re ABC Funds investor material, but I may be thinking of someone else.

Happy investing!

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