How to Establish an Investment Fund

If you establish an investment fund, it usually means that you start a mutual fund or that you set aside money for investing. The second meaning requires no instructions; it's nothing more than discipline and setting the money aside. Starting a mutual fund isn't that difficult, either. Normally, the first investment fund most people have is a blend of both stocks and bonds. There are a few steps to take when you establish this type of investment fund.

Things You'll Need

• Brokerage account
• Cash

Instructions

Starting a Mutual Fund

1. Investigate all the companies that have mutual funds. To find the best one, look for a diversified family of funds. Mutual funds offer a volume discount and the ability to trade between their family of funds free, so you'll want to have the options available if your investment goals change or you need to balance your investments. The older you are or the closer in time to your goal, the smaller percentage of stocks you'll want in your portfolio.

2. Select the company and decide whether you want to purchase directly from it or open a brokerage account to make the purchase. If you purchase directly from the company, often there's an application and printable prospectus that you can find online.

3. Fill out the application, print it and mail it in with your initial investment. The prospectus tells you the minimum amount you need to begin. If you select an automatic debit from your account, sometimes the mutual fund company will withdraw the money. Local representatives sometimes fund directly to clients.

4. Start with a brokerage account. You don't need to buy directly from the mutual fund company. You can choose to start with a brokerage account. Find a broker or online broker for your fund purchases. Fill in the paperwork to open a brokerage account. Once the account is open, you can put in money you wish to invest.

5. Purchase the mutual fund with a buy order. Each fund has its own symbol. You'll need to know that ahead of time before you purchase the fund. When you do the Buy shares yourself. Simply fill in the number of shares you want to purchase based on the assets you have available. The purchase of any funds occurs after the market closes, so you won't know exactly how much you spent. Make sure to overestimate the closing price if your money is limited. This way you cover the cost of the sale.

6. Expect the brokerage firm to take the money from your money market account once the sale is complete. If you purchase no-load mutual funds, many brokerage firms charge a fee for the transaction. If you have a broker make the purchase for you, all you need to do is write a check for the funds you want to purchase.