How to Pick a Mutual Fund

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To pick a mutual fund, consider the cost of investing, the load on the front and back end, the internal expense, how it fits into current investments and the asset class of the mutual fund. Understand the tax implications of purchasing a particular mutual fund with help from a financial planner in this free video on investments.

Part of the Video Series: Investment Facts
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Video Transcript

Hi, there. I'm Cathy Pareto, the founder of Cathy Pareto and Associates, certified financial planner, here in Miami, Florida. In this clip, we're going to be talking about how to pick a mutual fund. Now, I can probably spend about an hour on this topic alone, but let's keep it in general terms. If you're thinking about buying a mutual fund, you have to consider many factors, including the costs of acquiring that mutual fund, whether it's going to cost you a commission, a load on the front end, on the back end. What is the internal expense of that fund on an ongoing basis? And more importantly, how does that mutual fund fit in with the rest of my investments in my portfolio? Is it going to create overlap? Is it going to create concentrations? You have to look at what asset class or what part of the market you are buying by buying that mutual fund. There...for example, large company, large company values, small companies. There's all sorts of mutual funds that you can buy, and you want to make sure it fits into the puzzle of your portfolio. Last thing to consider: If it's in a taxable account that you're buying a mutual fund, what are the tax implications of that fund? Does it have a lot of turnover? Is it sensitive to taxes? So you want to consider all of these factors and more when buying a mutual fund. So that's been a little bit about how to buy one, and this has been Cathy Pareto in Miami, Florida.

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