By: Gene Walden, Senior Finance Editor, Thrivent Mutual Funds August 13, 2019
No experience investing? Economic discussions make your eyes glaze over? It doesn’t matter. You can do this. Starting an investing plan may be much easier than you thought.
When you invest in mutual funds, you don’t have to follow the markets or keep track of the economy day-to-day if you don’t want to.
You can make one key decision – which mutual fund (or funds) matches your long-term goals – and set your investment plan in motion. A professional money manager (or a team of professional money managers) make the critical investment decisions in your portfolio for you. Just like any investment, you’ll want to keep in mind that your investment may increase in value and you also face the risk of loss of principle.
Here are some basics to know:
- What is a mutual fund? When you invest in a mutual fund, you own a share of an entire portfolio of investments – usually stocks, bonds or a combination of both. Your single investment provides diversification across the entire fund portfolio. While diversification may not prevent losses, it may help mitigate losses in a down market.
- How much does a mutual fund cost? Some mutual funds charge an upfront fee of up to 8.5% of assets invested (known as “front-end load” funds). Others may charge a fee when you sell your shares (known as “back-end load” funds). Other fund families charge no sales load (these are known as no-load funds). For instance, Thrivent Mutual Funds offers more than 20 no-load funds known as “Class S shares.” Nearly all funds charge an annual management fee. According to the Investment Company Institute, the average annual equity mutual fund expense ratio in 2018 was 0. 55% of assets under management. To understand more about fees and expenses, and what to expect from Thrivent Mutual Funds, see “Mutual Fund Fees and Expenses.”
Getting started with mutual funds
1. How much do you want to invest? Start with as little as $50 a month1 with a Thrivent Mutual Funds account (See: Start Building a Nest Egg at $50 a Month). Or invest a lump sum of $2,000 or more. If you want to invest each month, set up an automatic investment plan and the payments will be automatically made directly from your checking or savings account.
2. Why are you investing? Investing for retirement, a house or a car? Consider if your goals are short term or the long term. Your goals and investment timeline can help determine the type of fund or funds that you invest in. You should also take into account your overall portfolio, current financial situation, investing experience, time horizon and other investments you may have (such as a 401(k) plan at work). It’s also helpful to think about your threshold for risk.
3. Which fund or group of funds will you choose? Do some research to select a fund or funds that you believe best line up with your investment profile. Our investment style quiz can be a place to start. Some of the more aggressive funds invest primarily in stocks, such as large-cap stocks, small-cap stocks, mid-cap stocks, and international stocks, while income-oriented funds tend to be less aggressive and invest in bonds and other types of income investments. You may also choose to invest in an asset allocation fund that holds a variety of different types of investments, including both stocks and bonds. There is a wide range of asset allocation funds available from moderately conservative to aggressive. View funds offered by Thrivent Mutual Funds.
If you’re not comfortable making a decision on which mutual funds are best for you, you may want to consult with a financial professional to help guide you.
4. Sit back, relax and let your portfolio managers do the work. Spend your time doing the things that are important to you while your portfolio managers make the critical buy and sell decisions. You may also want to periodically consider increasing your purchase amount to keep up with inflation or step up your investment.
Now that you understand the fundamentals, the next steps to beginning your investment plan are up to you. What are you waiting for?
1. New accounts with a minimum investment amount of $50 are offered through the Thrivent Mutual Funds “automatic investment plan.” Otherwise, the minimum initial investment requirement is $2,000 for non-retirement accounts and $1,000 for IRA or tax-deferred accounts, minimum subsequent investment requirement is $50 for all account types.
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