- Invest in a no-load fund that also has low expenses (less than 0.5%)- Fees and commissions eat away at a fund's return on investment. If there are market beating mutual funds (there are plenty) with low expenses and no commissions, why would you pay these fees?
- Select funds that have great long-term returns- Mutual fund returns (just like individual stocks) can have fluctuating returns from year to year. If you only look at what the fund has done over the last year, you aren't seeing the entire picture. Remember, you are investing for the long haul (most likely 15-40 years before retirement) and you need proven and sustainable performance. Ideally, look at the fund's 10 year annualized return and compare it to peers of the same category.
- Look for a long term manager- A mutual fund with a manager that has been in charge for at least 5 years is ideal. You can't accurately predict how a fund will perform in the next few years if it has a new manager.
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