- Pray that God guides your thoughts in selecting the correct mutual funds. There are many choices; too many to count!
- Target a particular investment class.
- Review the fund and examine its performance level. The performance level is defined as the investment return in one, three, and five years. Identify those funds that have a high investment return for those particular years. This is an important step because you will see the difference between the funds. Some outperform others. Knowing this will help you make a decision because it will decrease your options immediately.
- Review the volatility (risk) of the fund. The volatility is measured in the term Beta. Beta measures an investment return (price movement) relative to the overall market of the index.
- Read and review the mutual fund perspective and purpose. This will give you an overview of the type of fund as well as the fund’s investment focus.
- Purchase the funds and invest in them monthly, continuously. You will need to invest these funds in an IRA (Individual Retirement Account) or in a savings plan from your company called 401(k). If you don’t have either one of these, call any investment firm, and they will set you up immediately.
- Review your choices semiannually. Only sell funds if you find that fund is lagging behind its peers or other funds in the same investment class. Give the mutual fund a chance before selling. I normally wait nine to twelve months before I make changes in my portfolio, sometimes longer than that.
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