In today’s economy many people are aware of the various advantages of investing in mutual funds. Mutual funds tend to be safer investments than stocks, and tend to be good for long term wealth creation and growth. So if you want to get started investing in mutual funds, you must first decide what mutual fund you want to invest in. The first way to go about doing this is to pick out the company or organization that you would like to purchase the mutual fund from. There are several different options to look through when purchasing mutual funds.
1.) Insurance Companies- First off, I would like to recommend avoiding purchasing mutual funds through insurance companies as much as possible, as many times insurance companies mutual funds come with “Strings attached”, which can be combining mutual fund purchases with other products or insurance packages. Another disadvantage of purchasing mutual funds through insurance companies is that they tend to charge high percentage fees, typically higher than some of the other mutual fund purchasing options.
2.) Mutual Fund Companies- This would be the number one place to purchase mutual funds in my opinion, as they tend to give you the best options and the best (lowest) fees percentages. It also allows you to purchase the mutual fund directly, and research many different choices of mutual funds before making your final decision.
Some of these companies can be found online, through trading websites like E*TRADE (Although you’re better off going to the mutual fund company’s website directly to avoid an E*TRADE transaction fee which is typically around $20). I personally prefer Vanguard Mutual Fund Company, as they tend to charge no transaction fees, and only take a small percentage of dividends. Vanguard also tends to only provide funds that they believe will make you money, especially over the long term.
3.) Banks- Banks are another place to purchase mutual funds, although I also wouldn’t recommend banks for purchasing mutual funds either. Banks tend to offer only a few different choices in funds, and the choices are usually very limited. The other disadvantages of using banks to purchase mutual funds are similar to insurance companies, as they tend to charge high transaction fees.
4.) Financial Adviser or Investment Adviser- These advisers may lead you to mutual funds that charge high fees, or may not earn very much in return, so it is important that you really trust your financial adviser. Also, they typically charge large transaction fees for purchasing the fund for you, so be weary of this as well.
Overall, there are many options for purchasing mutual funds, but there are really only one best option in my opinion. I would recommend purchasing them through an independent mutual fund company, which can be found easily on the internet. These include Franklin Templeton, Vanguard, and more.