Before deciding to invest in mutual funds, ask yourself:

Are you prepared to make a long-term investment? Allowing your money to work for five or more years takes patience and discipline, but historically, mutual funds have rewarded those who exercise both. If you think you’ll need your money within a relatively short time, consider investing in a money market or other low-risk fund.

How much risk can you comfortably tolerate? Mutual funds have varying degrees of risk and fluctuate in value daily. Don’t choose a fund if the manager’s investment strategy will make you uncomfortable.

What are your investment goals? A comfortable retirement? A child’s college education? Are you simply trying to build wealth? Mutual funds are excellent vehicles for all three, but you would probably choose different funds to accomplish each of those goals.

Are you willing to keep learning and give your portfolio a regular checkup? Even though a professional will be managing your money, you need to keep track of how the fund is performing. You can check a fund’s net asset value (NAV) in the financial section
of major newspapers or online. When you have questions about a fund, contact the fund company for answers.