how to choose mutual fund

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peterb111
Posts: 1
Joined: Wed Oct 04, 2017 8:50 am

how to choose mutual fund

Post by peterb111 » Wed Oct 04, 2017 9:04 am

I am new to here and mutual fund. I have a 401k account and have some money inside. I am thinking to buy some mutual funds as long term investment. By looking at their performance, I found some good long term (5yrs, 10yrs) return mutual funds have much better short term (YTD, 1Yr ) returns, i.e their short term returns are much bigger than their long term returns . I am wondering does that means they are too high to buy. I know the market is up and down. So I think I should avoid entering a going down fund at the beginning, right? I know there are some factors. But I am focusing on return now. thanks,

snarlyjack
Posts: 421
Joined: Fri Aug 28, 2015 12:44 pm
Location: Montana

Re: how to choose mutual fund

Post by snarlyjack » Wed Oct 04, 2017 2:24 pm

Hello Peterb111,

The very 1st thing I do when checking out a mutual fund
is to look at the ER fees (expense ratio). The lower your fees
the lower your cost.

Then, I look at see what kind of fund it is (stock/bond/balance fund).

I would suggest that you read the Boglehead "Wiki". This will help you.

Good luck & Welcome to Bogleheads.

mega317
Posts: 889
Joined: Tue Apr 19, 2016 10:55 am

Re: how to choose mutual fund

Post by mega317 » Wed Oct 04, 2017 2:49 pm

Before choosing funds, you need to take a few steps back. You need to determine your financial goals (does "long term" mean retirement to you?) and risk tolerance. Then you need to determine your desired asset allocation. Then you choose funds that fit. There is no reason to look at past returns.

I would take some time (like, many hours) reading before you do anything.

Here is getting started on the bogleheads wiki.
https://www.bogleheads.org/wiki/Getting_started

Here is a free, short pdf book on the basics
https://www.etf.com/docs/IfYouCan.pdf

This book by Mr. Bogle changed my life quite literally. I believe there is a new edition coming soon.
https://www.amazon.com/Little-Book-Comm ... adswiki-20
Amazon is telling me I bought that book May 7, 2008 so that's how long I've had any clue what I was doing investing.

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