HOW DO I CHOOSE THE RIGHT FUND?
Before selecting the fund/fund mix consider the following:
 | After Taxes and Expenses, how much do you have to invest |
| What are you financial goals. Retirement? A child's education? Current Income? |
| What is your time frame? Do you need the money in a few months? 3 years? 5 years? 10 years? Generally, the longer the time horizon, the more risk you should be able to take. |
| How do you feel about risk? Are you willing to tolerate the ups & downs of the financial markets for the possibility of greater returns over the long term? |
By addressing and weighing the above factors, you'll be able to build a diversified portfolio tailored to your individual needs
WHAT ARE THE RISKS?
Share prices of stock funds will vary with market conditions and factors
affecting the companies they invest in. Share prices of bond funds will be affected
by interest rate changes which can vary the prices of the fund's holdings. So at any
given time...your investments may be worth less than when you bought it. On the
other hand....it may be worth more. Your ability to tolerate risk is a critical
factor in determining the kind of funds you should select. However, eventhough
investing in funds involve risk...there may be a substantial risk in not investing.
By missing opportunities for growth, over time, the "purchasing power" of your
money could be eroded by the effects of inflation. For example...if inflation is at
a 4% annual rate and your money is in a bank account earning 3% annually...your real rate
of return is negative 1%.
RISK REDUCTION STRATEGIES WITH MUTUAL
FUNDS
Because of professional management and diversification, a mutual fund inherently
helps to reduce investment risk. You can further reduce your overall portfolio risk
by strategically investing your money across different types of mutual funds through an
approach called "asset allocation"
WHAT IS ASSET ALLOCATION?
Asset allocation can be summed up in a single word....diversification. By
diversifying your savings across different types of investments, asset allocation helps
reduce the risk of volatility associated with any one particular investment,.
Allocating your assets along a broad spectrum of mutual funds, from conservative bond
funds to aggressive growth stock funds, will help provide an effective way to build an
investment portfolio.
