How to Invest in Canadian Mutual Funds

Like United States mutual funds, a Canadian fund essentially pools your money with that of other investors and invests under the guidance of the fund's manager. A Canadian mutual fund may invest primarily in stocks, bonds, cash, or other kinds of securities. Alternatively, a mutual fund may invest in a variety of securities. There is a wide range of Canadian mutual funds from which you can choose, allowing you to select fund options that are well matched to your investment objectives.

Difficulty: Moderate

Instructions

Things You'll Need:

• Money to invest
• Access to the Internet

Instructions

1. Consider both the near and distant future in developing investment objectives. Make a list of both short-term and long-term financial goals.

2. Assess the level of risk with which you are comfortable.

3. Determine the portion of your assets that you'd like to allocate to Canadian mutual funds.

4. Determine the types of mutual funds in which you are interested. Depending on your investment objectives, you may prefer growth, income, combination growth and income, international or index funds.

5. Research and compare Canadian mutual funds on the Internet. Morningstar, a link to which can be found in the Resources section below, provides in-depth information about Canadian mutual funds and offers ways for you to compare them.

6. Request prospectuses for the Canadian mutual funds that are in line with your investment objectives. Carefully consider the risks versus the benefits of investing in each fund you are considering. Be sure to consider the costs and expenses associated with each mutual fund as well.

7. Decide whether to pursue load or no-load funds. Load funds charge commissions and no-load funds do not.

8. Contact your broker to purchase shares or contact the mutual fund directly.

Tips & Warnings

• If you live in the United States, you may be liable for taxes on foreign mutual fund profits. Consult with a tax advisor to learn what to expect.
• Typically, mutual funds give you choices concerning how your distributions and dividends are handled. You may choose to have them sent to you or you can select a reinvestment option, using distributions and dividends to purchase additional fund shares. Many mutual fund companies waive sales charges for automatic reinvestments.
• Today, many banks offer mutual funds. Don't allow a bank's name and reputation to lull you into a false sense of security. There are risks involved with mutual funds, no matter what their origins. Furthermore, bank-offered or not, mutual funds are not Federal Deposit Insurance Corporation (FDIC) insured.

Resources

• Visit the Morningstar, Inc. site by clicking here.