Mutual funds simplify what you may find most
complicated about investing — figuring out what to buy and
when to sell to meet your particular goals or objectives. For
example, if you're seeking growth by investing in
blue chip stocks,
there are a wide variety of funds to choose
from that pursue precisely this strategy.
To choose the fund that will help you meet a specific goal, you can compare its long-term performance — over 5 or 10 years — to other funds with similar objectives, learn about who the manager is and how the fund is run, and check out its fee structure. You can use the fund's prospectus, information on the fund company's Web site and other financial Web sites, and professional advice.
Mutual funds can help you
diversify
your portfolio, or spread out the money you have to invest to meet different goals. One way to diversify is to choose funds with different objectives, aligned with your own, or representing different segments of the market. For example, you might buy a
blue-chip
fund, a small company
growth
fund, an international stock fund, and a government bond fund.
