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Factors for diversified mutual fund

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Assume you've decided to buy a diversified (i.e., not a sector fund) open-end mutual fund investing in U.S. common stocks. Because there are thousands of these funds available, you need to shorten your list. Describe the factors that will be important to you as you narrow your choices.

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Solution Summary

This discusses the factors to be considered for buying mutual fund

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Simply put, you should invest so that your money grows and shields you against rising inflation. The rate of return on investments should be greater than the rate of inflation, leaving you with a nice surplus over a period of time. Whether your money is invested in stocks, bonds, mutual funds or certificates of deposit (CD), the end result is to create wealth for retirement, marriage, college fees, vacations, better standard of living or to just pass on the money to the next generation. Also, it's exciting to review your investment returns and to see how they are accumulating at a faster rate than your salary.
By investing into the market right away you allow your investments more time to grow, whereby the concept of compounding interest swells your income by accumulating your earnings and dividends.
Mutual Fund: These are open and close ended funds operated by an investment company which raises money from the public and invests in a group of assets, in accordance with a stated set of objectives. ...

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