How to Buy a Mutual Fund

By Stephanie Powers

  • Overview

    Mutual funds are widely available for purchase. In fact, you can buy and sell on your own or consult a professional. But first, you'll need to decide which fund is right for your objectives and financial needs. A mutual fund account is required, which includes personal financial information. Because financial institutions have various account requirements, the minimum purchase amount will vary. Once the account is funded, you are ready to buy the mutual fund.
    • Step 1

      Set an investment objective like saving for retirement. Evaluate your level of risk tolerance and the timeframe you can invest, for example, 10, 20, or 50 years. All of this information will help narrow the right type of mutual fund for your objectives. Use the mutual fund screeners available on the Morningstar website to determine the right mutual fund. Make a determination based on the fund type, rating, and performance return.
    • Step 2

      Research mutual funds. Mutual fund companies are required to provide a prospectus detailing the mutual fund's objective, the types of investment within the fund, expenses, and performance rates. This information can be found on the fund company's website. Read the data on each fund carefully and decide which fund meets your needs.

    • Step 3

      Decide if you want to buy mutual funds on your own or with the help of a broker. Mutual funds are available for purchase directly from the mutual fund company, a broker, financial planner, or bank.
    • Step 4

      Start an online account. If you intend to manage your own account, you can buy mutual funds online directly from fund companies such as Fidelity or an online broker like E*trade. Go to the website and complete an application. You will need to provide personal information such as a Social Security Number and other information. This data is used to make sure your investments are appropriately reported to the IRS. Read the account agreement carefully. It details the terms and agreements of the account including any fees.
    • Step 5

      Interview brokers if you would like professional advice. Mutual funds sold via brokers may charge sales fees. The fees are a percentage of the amount invested and are paid to the broker for advisory.
    • Step 6

      Deposit cash into your account. Either electronically transfer funds from a checking account, another brokerage account, or mail a check in to the company. Once the account is set up and funded, you are ready to purchase a mutual fund.
    • Step 7

      Enter a buy trade for online accounts. Input the mutual fund symbol or name of the fund. Type in the dollar amount you would like to invest in the fund. Different fund companies and brokers have minimum dollar amounts for trades. The online broker will ask you to confirm the transaction before it is processed.
    • Step 8

      Once you own a mutual fund, you will start receiving account statements which detail recent transactions and the current value of your mutual funds. Monitor the account on a regular basis to make sure it continues to perform in a manner that meets your needs.
    • Skill: Moderately Easy
    • Warning:
    • Mutual funds are designed to be long term investments.

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