With Limited Time To Invest|Learn Fast

Money Knowledge Helps Avoid Financial Mistakes

You know you only have so much time to invest enough money to last a lifetime.   You work your first 40 years to accumulate enough money to last your last 30 years in retirement.

Don’t waste those 40 working years by wasting your money on frivolous investments that lose value.   Give your investments a better chance at growing in value by researching an investment before putting money into it.

Even though investment research is so dry and boring, it’s worth your time because it will save you much personal grief and stress.   Be ready for retirement when it gets here.

What Does Good Research Look Like?

  • Use a reliable source.

Morningstar is a reliable source of information.   It is a research firm that analyzes and ranks mutual funds.  The information they offer is invaluable because it digs deep into mutual fund company data.   It may be more data than you need, but at least you have a reliable source to refer to when you need it.  Check them out online.

  • You can never get too much information.

Get a copy of the company prospectus.   This shows a lot of the same information you would find at Morningstar but it also gives additional information that Morningstar may not have.   You can usually find the prospectus online.

You should also review the company annual report, which you should also be able to get online.

  • What to look for.

Type of fund

The type of fund you want to invest in depends upon your time horizon and comfort level of risk.  An emerging fund is much more risky and a value or balanced fund.

The general types of funds available include: growth, value, balanced, international, emerging, large cap, mid cap, small cap and lifestyle.

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How long has the fund manager been at the firm?

This is just a point of reference.   Time at a firm may or may not influence the performance of the manager.   A fund manager could be at a firm a long time and do well or do poorly; and then again a new comer may perform the same.


How much does the fund cost?

Find this out by looking at the fund’s expense ratio.   These ratios can range from .20 all the way up to 2.00.   The higher the expense ratio is, the more it costs you.

Higher expense ratios do not always indicate that the fund will have higher returns.  This is why the expense ratio is only one key indicator used in your research of the fund; you have to look at the other indicators that we have listed here to come up with a solid evaluation.


What are the funds top 10 investment holdings, what securities are they invested in?

The holdings tie into the type of fund they are.  If the fund invests a large percentage of assets in new, riskier start up companies chance are they would be a small cap.   If they invest in companies in third world countries they are most likely an emerging market or international fund.

All mutual funds list their top investments so that you can evaluate what type of fund they are.


Even though past performance does not guarantee future performance, you still want to know the history.  Review the funds performance of the past 10, 5, 3 and 1 year(s).

Continual Review|Never Ignore.

You review the above information when you initially go into an investment and review that same information once a year.

A portfolio that is invested in the market, is in a constant state of change.   Due to this constant change you would never want to ignore your investments.   If you are not monitoring your investments at least once a year you lose control and they could lose market value.

Pick the same time every year and review your investments key indicators; the returns, fund manager, top 10 holdings and expense ratios.