In today's economy, it seems like a lot of investments are risky with many companies reporting less than stellar returns. If you want to get started in investing but feel overwhelmed by the amount of decisions and other factors involved, then high yield mutual funds are an excellent choice even for those with little to no experience.
When the economy slows down and stock prices are going down, it makes sense to invest into stable industries that provide healthy dividends. Examples of mutual funds that pay high yields include utility companies as they are a fairly stable industry. Here are 5 tips to get you started.
1. Diversify - High yield mutual funds shouldn't be your only investment as you also want to diversify into other holdings for reduced risk. You can literally find hundreds of different funds available that invest into specific assets ranging from only energy stocks to those that invest in large cap companies.
2. Risk factors involved - Keep in mind that high yield mutual funds also tend to be more aggressive so the fund may go down when the economy slows down or the company is unable to pay back its debts. Be sure to take risks factors into consideration before investing.
3. Use rating systems - Companies such as Morningstar use simple rating systems to rate individual funds based on a multitude of criteria. Be sure to thoroughly use these for your market research into how well a fund might perform in the future.
4. Decide on a load or no-load fund - Load funds charge a fee which is typically a percentage of your investment while no-load funds do not. Always try to find those do not charge a fee as this would mean a higher return on your investment.
5. Choose those that interest you - There are many different funds available for you to invest in and while you can choose the one that many recommend, choosing the one that interests you or that you are familiar with will enable you to make better decisions.
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