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The New Common Sense Guide to Mutual Funds
İMoney Magic, Inc.9/4/99
Saturday Daybreak KATV, Chn. 7
Mary Ann Campbell, CFP

Mary Rowland translates financial jargon into concise, usable advice.

The Dos and Don'ts
Here are 75 points of wisdom that you can use immediately to make your money work smarter.

  • DO invest chiefly in the stock market.
  • DON'T buy bond funds.
  • DO build your portfolio with at least three "core" mutual funds.
  • DON'T buy alphabet soup funds (B shares, C shares, M shares, Y shares).
  • DO start with just one fund it that's all you can afford.
  • DON'T follow the crowd.
  • DO take a skeptical attitude toward mutual fund ratings.
  • DON'T pay attention to what a fund calls itself.
  • DO use index funds.
  • DON'T try to time the market.
  • DO invest in different asset classes.
  • DON'T buy asset allocation funds for your portfolio.
  • DO manage your own cash.
  • DON'T buy and sell with your emotions.
  • DO look under the hood.
  • DON'T buy (or sell) a fund based on recent performance alone.
  • DO look for consistency.
  • DON'T buy a fund based on recent performance alone.
  • DO look for consistency.
  • DON'T buy a fund with high turnover.
  • DO look at income alternatives.
  • DON'T invest in a fund that's too big for its britches.
  • DO buy funds from a single fund family or a discount broker.
  • DON'T ignore expenses.
  • DO consider a so-called institutional fund.
  • DON'T jump in just before a fund closes to new investors.
  • DO consider closedend funds.
  • DON'T overlook spiders.
  • DO look for a fund manager with passion.
  • DON'T confuse a change in the fund's share price with an investment gain or loss.
  • DO add to your holdings with an automatic-investment program.
  • DON'T ignore a flood of assets.
  • DO check Bloomberg's good and cheap funds.
  • DON'T get confused by loads.
  • DO read the prospectus.
  • DON'T be confused by the profile prospectus.
  • DO get help over the phone or on the Web.
  • DON'T ignore the vested interest of the seller.
  • DO elect reinvestment of dividends and capital gains.
  • DON'T buy a market-timing fund for your portfolio.
  • DO look at what the pros use.
  • DON'T overlook the Roth IRA.
  • DO read the proxy statement.
  • DON'T buy gimmicky funds.
  • DO invest internationally.
  • DON'T buy global funds.
  • DO look to see how a fund uses derivatives.
  • DON'T rely too much on ratings.
  • DO check to see if the manager buys his fund.
  • DON'T ignore your mutual fund statements.
  • DO read the annual report.
  • DON'T neglect the buying opportunity in new funds.
  • DO think about how to sell your funds when you need the money.
  • DON'T be fooled by so-called diversified funds.
  • DO make your 401(k) the core of your mutual fund portfolio.
  • DON'T mistake commodity funds for mutual funds.
  • DO think about the impact of taxes on your investments.
  • DON'T neglect an annual performance review.
  • DO consider real estate funds.
  • DON'T stick with a bond fund that is maintaining its payout by returning your principal.
  • DO consider a "fund of funds" for a specific purpose like a college account.
  • DON'T stick with a fund if the manager doesn't.
  • Do rebalance.
  • DON'T own more than a dozen funds.
  • DO use a mix of investment styles.
  • DON'T buy a load fund without determining that there is something special to justify it.
  • DO look for concentration.
  • DON'T use gold funds.
  • DO consider natural resources funds as an inflation hedge.
  • DON'T hold on to a fund that has changed direction.
  • DO leave room in your portfolio for a special manager.
  • DON'T sell all your stock funds when you retire.
  • DO check the investment style.
  • DON'T overlook "social" funds.
  • DO vote against fee increases.
  • DON'T ignore the demise of the short-short rule.
  • DO use mutual funds as a launch pad.

Building Blocks: The history of mutual funds, and what your need to know to buy and sell.

Risk and Asset Allocation: How aggressive should you be? And once you decide, how do you spread your money around?

Common Sense Strategies: Discipline is the key to these simple plans used by successful strategic investors.

Resources: In print, on-line, and by phone: how to find information to help you make smart choices.