| Picking individual stocks for your portfolio can be really | | | | periods of time and under different market conditions. |
| difficult under the best of circumstances. Under the | | | | All mutual funds do good during bull markets, but you |
| worst of circumstances it can be downright dangerous | | | | should look to see how well your fund did during the |
| because if you make just a few bad choices you can | | | | last two or three recessions before you get the real |
| lose your shirt quicker than you would think. | | | | picture about how well the fund will handle things in the |
| One way to save yourself from the dangers of | | | | future. |
| investing in individual stocks, or even of investing in the | | | | To say just a word on the continuity of style; you |
| stock market at all is to invest primarily in mutual funds. | | | | should always read funds annual reports as well as |
| The problem then becomes, which fund should you | | | | proxy statements. From those reports you'll see if your |
| select? There are thousands of mutual funds and it | | | | mutual fund has shifted its investment style drastically |
| can become a dizzying exercise in futility to pick the | | | | over the years and if they did then why did they do |
| right one. Fortunately that is exactly what I'm going to | | | | that? It probably means that what they were doing |
| talk about with this article today. | | | | wasn't working. You want a fund that has done the |
| In order to select the best fund for you and your | | | | same thing for many years with success and hasn't |
| specific portfolio requirements and risk aversion, you | | | | had to jump from fad to fad in order to find success. |
| should follow five basic rules. | | | | I won't say much about the rule about using your |
| Those rules are one, diversify; two, analyze the funds | | | | money funds wisely but you should find a money |
| performance over a very long period of time; three, | | | | market fund that invests in the most secure things |
| look for funds that have a continuity of investment | | | | possible especially in light of the current recession and |
| styles; for, use your money funds wisely if at all | | | | financial crisis or meltdown as it has been termed by |
| possible; and five, recognize any mistakes that you | | | | some. |
| have made, cut your losses and move on. | | | | Finally recognize any mistakes and get the heck out of |
| Let's talk about diversification. Everybody knows that | | | | there. This one should be self-evident. We all make |
| you should diversify your stock portfolio, but most | | | | mistakes even in choosing bad funds and it won't take |
| people don't realize that you should also diversify your | | | | you very long to determine if this has been the case |
| funds. I recommend you pick at least three different | | | | for you. If so, don't wait for the market to turnaround in |
| mutual funds depending on your exact investment | | | | order for you to make your profits back, just cut your |
| needs. | | | | losses and find a better mutual fund. |
| Now let's talk about analyzing performance. You | | | | So there you have five simple rules that you can use |
| should evaluate the funds performance over long | | | | to help you pick the best mutual fund. |