The most important thing you will need to decide before purchasing shares in a mutual fund is, of course, how much you wish to invest. Now, if you're just getting started in investing, you may not have a lot to invest. If this is the case, you may need to invest all of your money into one mutual fund to begin with. If you have more money to work with, or you are more experienced, you may want to spread your money out over a couple of funds. You might even choose to put a portion of your money into mutual funds, and the rest into riskier investments that may provide a stronger growth opportunity.
Your first option for investing in a mutual fund is to do so through a brokerage firm. Some brokerage firms sell a wide variety of funds, and some have their own funds, which they may sell exclusively. If you buy shares through a brokerage firm, they will hold those shares in your account with the firm.
You can also buy shares directly from the funds themselves. These would be through companies such as Vanguard or Janus. Any shares you buy through the funds themselves are held directly by the fund.
Some fund companies and brokerages sell a very wide range of funds. Charles Schwab is one of the most well-known brokerage firms that sells many different mutual funds. Fidelity and Vanguard are two widely-known mutual fund families that sell funds other than their own. These companies may sell hundreds, or even thousands of different funds.
Also, it is not a good idea to buy multiple funds that have a large number of their major investments in the same companies, because if one fund performs poorly, the other will, as well. One of the big advantages of purchasing shares in multiple funds is lessening risk through diversification, and that advantage is lost if you buy shares in funds with extremely similar portfolios. This fits with the rule of not buying funds with similar investment objectives, because most funds have similar portfolios.
When buying shares in a mutual fund, you can time your purchase just like you might time your purchase when investing in stocks or bonds directly. It is extremely difficult to do this, so you may want to just skip this. If you're interested in doing this, though, you might choose to buy during a time when the markets have fallen slightly. In reality, though, unless you are investing a rather large amount, the money you save won't be that great.
There is no real advantage to buying directly from the funds themselves. You won't typically pay more when you buy through a broker than when you buy directly from the fund, although some brokerage firms will charge a fee for buying no-load funds. The real advantage to buying through a firm, even if you must pay a fee, is that you would have your entire portfolio in one place. That could be a real blessing when it comes to tax and accounting purposes.
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