|1.||Know what you're investing for.|
|2.||Make paying yourself a priority.|
|3.||Make tax-smart investments.|
|4.||Diversify your portfolio.|
|5.||Choose good investments.|
|>||Individual securities or mutual funds?|
|>||Index funds versus actively managed funds|
|>||Mutual fund expenses|
|>||Relationship between expenses and returns|
|>||Selecting a financial services company|
The manager of an actively managed fund seeks to produce investment returns that are better than the fund's designated market benchmark by buying and selling individual securities that they believe will outperform the market. Each manager follows a stated strategy for trying to beat the market by following macroeconomic trends, visiting companies, reviewing balance sheets and income statements, and closely following the day-to-day workings of a company.
While active management typically results in higher costs, extra value may often be derived from this approach because it allows fund managers to buy and sell securities based on their extensive research, as well as company and industry knowledge.
Find the investment philosophy to suit you.
No matter which investment philosophy you select, it makes more sense to choose managers who have demonstrated their talent and discipline over time and seek to deliver longterm performance. Find a fund manager who has a number of years' experience in a specific category. Choose someone with a proven track record and a demonstrated ability to dig deep to find companies that may be poised to outperform their peers. You'll often find this type of background information in a fund's annual report and prospectus.