How to Choose a Mutual Fund

If you are selecting actively managed mutual funds of your own volition, or if you are forced to do so because your 401(k) plan does not provide an index fund, you should have the mindset that you are selecting from a universe that underperforms the market and you are primarily attempting to cut your losses. If you think that we can give you a set of directions that are likely to beat the market using mutual funds -- well, we really don't have a system for that and we don't believe anyone else does either. But with the objective of keeping expense ratios and turnover low, you can improve your chances of finding a fund that will not lose badly to the market and improve your chances of finding a fund that holds some promise of outperforming the market. (Full Article)

9 Guides To Pick Mutual Fund

Picking a mutual fund from among the thousands offered is not easy. The following is just a rough guide, with some common pitfalls.

1. Check with your tax advisor prior to investing in a tax-exempt or tax-managed fund.

2. Match the term of the investment to the time you expect to keep it invested. Money you may need right away (for example, if your car breaks down) should be in a money market account. Money you will not need until you retire in decades (or for a newborn's college education) should be in longer-term investments, such as stock or bond funds. Putting money you will need soon in stocks risks having to sell them when the market is low and missing out on the rebound. (Full Article)