Mutual Funds Research Tools: The Power Is in Your Hands
By: Regardless of your level of knowledge and expertise, mutual fund research has never been easier or more empowering.; Ann Webre; Source: AARP Bulletin Date Posted: 2006-06-14 08:44:00-04:00
Most small investors have neither the time nor money to manage a large stock or bond portfolio. That's why many Americans choose to invest through mutual funds consisting of varying mixes of securities designed to achieve different results. But choosing the right funds from the 10,000-plus options on the market today can be just as overwhelming.
The good news is that regardless of your level of knowledge and expertise, online mutual fund research tools have never been easier to use or more empowering. Many sites don't even require registration—supplying your name, email address and other contact info—to perform basic research.
Where to start?
Take the following quiz to help you identify your level of investing expertise. Once you know that, you can try out suggestions geared to your level.
Quiz
Do you know:
1. The investment alternatives offered by your employer's retirement plan
2. In what types of funds your own retirement savings are invested
3. At what age you can withdraw retirement savings without owing a penalty
4. At what age the IRS requires you to start withdrawing a minimum amount from your retirement savings
5. The 2006 IRA contribution limits and "catch-up" provision for people over 50
Do you understand what is meant by:
6. Roth IRA
7. Diversification
8. Asset allocation
9. Growth versus value stock investing
10. Indexing (or "passive") management versus active management
If you know the answers to fewer than three questions, consider yourself a novice investor. If you score between four and seven, think of yourself as experienced; eight or more, sophisticated.
Mutual Fund Research for Beginners
The best websites for beginning mutual fund investors are the sites that explain how mutual funds work and demonstrate the value (and ease) of planning and monitoring your investments. Try:
Investopedia.com
The site is packed with free, easy-to-read articles and tutorials, such as Investing 101, which is an eight-part tutorial for beginning investors and Mutual Funds: An Introduction, another eight-part tutorial that helps explain the basics and the appeal of mutual funds, and whether or not they're right for you. The site also allows you to research specific funds.
Troweprice.com
The website simplifies the process of selecting the right fund with an online step-by-step fund guide. The interactive guide, through a series of questions, helps the new investor determine not only which mutual funds best fit his or her investment needs, but why. The Step-by-Step Help: Selecting a Fund function helps you better grasp what type of investor you are—conservative, moderate or aggressive—and the risks, benefits and limitations to your approach.
The Mutual Fund Cost Calculator
This tool from the SEC enables investors to easily estimate and compare the costs of owning mutual funds. In addition, the Cost Calculator lets you assess how fund costs add up over time.
Research Tools for the Experienced Investor
Morningstar.com
Morningstar is probably best known as the organization that assigns "star" ratings to mutual funds. Its website, Morningstar.com, contains many sections that are free without registration or paid membership. See, for example, articles in Top Stories ("Four Questions to Ask When Buying a Target-Date Fund"), Most Popular Articles ("Two Strong All-in-One Foreign Funds"), Investment Highlights ("Woof! The 7 Worst-Performing Funds"), Funds ("How to Find the Best Core Bond Funds"), Investment Planning ("Model Portfolios for Retirees"), and Personal Finance ("Plan Ahead for Early Retirement").
Big Charts.com
Big Charts, a MarketWatch affiliate, is a comprehensive and easy-to-use online charting and investment research website. For a seasoned investor, Big Charts provides free access to interactive charts, stock and mutual fund quotes, and an archived selection of financial articles. The site also has a useful "BigReports" channel with "BigMover", "BigPics" and "BigMarket" reports, as well as a section dedicated to a particular stock's price quote history.
Mutual Fund Investor's Center
Mfea.com is designed to serve as a resource for investors who want to use mutual funds to reach their financial goals. The site monitors an extensive collection of mutual fund companies, offers helpful website links, fund listings and portfolio-tracking tools.
Research Tools for the Sophisticated Investor
If you fall into this category, you're probably buying stocks and mutual funds directly online, and perhaps utilizing the sophisticated research tools offered by online brokerages to paying clients. But also consider independent sites with different perspectives:
Brill.com
Brill.com provides free information, research and links related to mutual fund investing, individual mutual fund companies and the mutual fund industry. You can submit written questions to the site's experts and access archived questions and answers. Current and past articles include "Tread Carefully with Foreign Stocks," "Funds with Low Investment Minimums" and "Socially Responsible Funds Mature." Profiles of leading mutual fund managers are also available. If you want to join a discussion on some aspect of mutual fund investing, you can link to the site's online public forum.
FundAlarm.com
FundAlarm.com, a Forbes "Best of the Web" pick, was founded by certified public accountant Roy Weitz and is updated monthly with his commentary and insights. FundAlarm.com compares the performance of mutual funds; those Weitz considers "3-Alarm" funds are the ones investors may want to consider selling. The site's timely content is worth at least one visit a month.
Ann Webre, based in New York City, writes about investment issues.
The information provided is for general guidance only, and does not constitute the provision of legal advice, tax advice, investment advice, or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional tax, legal, or other competent advisers. AARP cannot recommend that you purchase shares of a particular fund or any security because AARP is not a registered investment adviser or broker-dealer.
Additional Related Links
Avoid 401(k) Neglect: Paying Attention Can Pay Off (March 2006)
The Trick to Managing Your 401(k) (AARP Segunda Juventud)
Investing in Mutual Funds (AARP.org)
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