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are many others. You can buy funds directly from these companies or sometimes purchase them through your own brokerage account. Exchange Traded Funds can be purchased through your brokerage account just like any stock and they don't require a minimum purchase.

One of the most important things to know about mutual funds before you buy is the range of stocks within a fund (the blend). You must decide if you want to buy a really diverse fund or something more specialized. An extremely diverse fund is the Wilshire 5000. This fund attempts to buy every stock on the market. Even more diversified are funds of funds, a fund that is made up a number of different mutual funds. Are you totally confused yet?

If you have a sense of what industries are hot right now, you might want to buy a more narrowly blended fund, one that invests in a single industry like utilities, commodities, pharmaceutical, energy, etc. For example, in the current climate, with China and India growing like crazy, they are using a lot of raw materials. Investing in commodities such as steel, copper, cement, and other building materials might be wise. The wars in Iraq and Afghanistan may be bad for our troops but they are a boon to the weapons industry. Buying an energy fund is also a no-brainer for right now.

It's possible, with some due diligence and a little research, to make a good decision about a mutual fund, even without professional help. It would be wise to invest in a safer fund in the beginning and see what happens. You can continue to do research in the meantime and switch your money over to another fund any time you want. Just be sure to make an accurate risk assessment and not put all of your financial eggs in one high-risk basket.

Learn more about this author, Bob Trowbridge.
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