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Step 1
Before you invest a penny of your money, do your homework. The Fidelity Magellan Fund has made a lot of money for a lot of people over the years, but it is as susceptible to market fluctuations as the market as a whole. There's something called Morningstar that rates mutual funds. It rates Magellan as 4 out of 5 stars. Magellan invests in large company growth stocks. That means big businesses like Nokia, Staples and Google. When the economy is doing well Magellan tends to do well. When the economy is bad Magellan tends to do poorly. Be sure you want this kind of investment. Download a prospectus and reports on the fund and read them before investing. They can be found at Fidelity.com (see Resources below).
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Step 2
You must figure out your time horizon. Will you need your money in a month, a year or 10 years? Fidelity Magellan is a medium- to long-term investment. That means you should plan to leave your money there for 5 years or more. Many investors use Magellan as a retirement investment and leave their 401K or IRA money there for decades. If you will need your money to pay bills or buy something big in a year or two then you should find a different investment.
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Step 3
If you have decided that the Fidelity Magellan Fund is for you then you need to decide how much to invest. The minimum investment is $2,500. Magellan is a no-load fund meaning there are no fees to buy or sell. There is an expense ratio of 0.73 percent that fund managers take out of your investment from time to time. It is a fairly typical expense ratio for an actively managed fund. If you want a lower expense ratio you may want to look at an index fund that isn't actively managed. You can add more money to Magellan or withdraw funds without penalty. There is no upper limit on what you can invest. Indeed, there are people with millions in Magellan. Remember, the more you invest, the more you can make (or the more you can lose!).
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Step 4
Now that you know how much you want to invest it's time to apply. You can fill out an application at Fidelity.com or call them at (800) FIDELITY. Be sure to tell them you want to invest in the Magellan Fund. They have dozens of investment products so you need to be specific. You will need to provide personal information like name, address and social security number. Allow yourself about a half hour for all the paperwork.
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Step 5
The only thing left to do now is fund your investment in the Fidelity Magellan Fund. You can send them a check, wire the money or perform a bank transfer. If you already have another Fidelity fund you can transfer money from that fund into the Magellan Fund. If you send a check it may take a few days for your money to post to your account. Don't freak out if it doesn't show up right away. Be sure to monitor your investment periodically. This is easy to do at Fidelity.com. Congratulations! You are now invested in the Magellan Fund.
Comments
sahill said
on 6/19/2008 I think I'll do this. I also like your other investment article. Keep them coming.