• Galia Gichon

3 Step Mutual Fund Review

Updated: Jul 15, 2019

Mutual funds are the fuel that drives our 401k, IRAs and even short term investments.  Unless you are a super savvy swift stock day trader, most of us need them for our portfolio.  They provide instant diversification and are easy to enter – even with little money saved.  Most of you probably have mutual funds and do not open the statement that comes in the mail every month or go online to check up on them.  Or even if you do these things, you may not know what to do with the statement or how to read the site.  Let’s get started with 3 quick steps for your mutual fund review.


1)     What kind of mutual fund do you own? Or what is the fund’s style or category? Look for Growth, Value, Large-cap, Small-cap, International, Bond.  If you have more than one mutual fund in each category, you want to pare it down to just one.  For example, you don’t need two Large-Cap Growth mutual funds.  The key to a smart retirement portfolio is to have one of each of these mutual funds.  That means you are diversified or your risk is spread among different types of investments.  Or all your eggs aren’t in one basket.

2)     Is it a No-Load or Load mutual fund? A load is a sales charge by the mutual fund company or brokerage firm.  The math is simple.  Most loads are 5.75%.  So, if you buy a mutual fund with $10,000 and pay a load of 5.75%, you have paid $575 before you even started earning any money!  Paying a load isn’t a bad thing but most people aren’t even aware they are paying this type of money.  Would you buy a new DVD player without asking the price tag? Why is it different for your investments?


3)     How many stars do you have?  Look for the Morningstar ratings.  They are out of 5 stars (5 is safest).  Five stars doesn’t mean you won’t lose any money; it means that within that category, it is one of the safest and most stable mutual funds.  A client recently learned about the Morningstar rating and once she saw a mutual fund she owned, right away she said “Wow it only has 2 stars; I don’t want to have such a risky mutual fund.”  It is so easy to make a decision like that once you understand what it means.

Stay tuned for more steps to come.  Get started with these 3 easy steps and see the light bulb go off in your head!  If you liked this valuable knowledge and want to read more, check out "MY MONEY MATTERS" kit!

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