Your Step-by-Step Guide to Investing in Mutual Funds to Save up Money for Any Long-Term Goal

Mutual funds are among the most popular investment vehicles in the United States.

In fact, data from Statista show that about 44.8% of American households own mutual funds. And if the assets invested in all mutual funds based in the U.S. were to be totaled, it appears that investors have put a whopping $17.71 trillion in these investment funds.

Its popularity isn’t really that surprising though considering the perks that come with putting money in mutual funds. It’s an easy way to invest in a combination of bonds and stocks.

What’s more, it’s a great way for people to save up money in the long run to fund your retirement and other goals. Here’s a step-by-step guide to help you get started.

Opening a Brokerage Account

IgorGolovniov/Shutterstock: Brokerage services providers like Fidelity won’t charge you extra fees if you buy their own mutual funds

The first thing you’ll need to invest in mutual funds is a brokerage account. You can choose to open one that’s affiliated with your current bank so you can link your accounts and transfer money to buy mutual funds faster.

Brokerage firms typically offer mutual funds they manage themselves as well as a variety of other mutual funds. As of 2018, there are reportedly 9,599 mutual funds in the U.S. managed by a wide array of financial institutions.

Choosing Funds to Buy

SergeyP/Shutterstock: Don’t forget to consider the buy and sell fees that come with certain funds

Given the thousands of options you have, it can be overwhelming to pick which mutual funds to invest in. Fortunately, most brokerage firms would provide you with some general information about mutual funds while some would even rate them to guide your decision-making.

Of course, it’s also recommended that you do research on individual funds and come up with a shortlist of those that meet your criteria. Use rating websites like Morningstar, Lipper, and Zacks to gather more information.

Making the Investment

With financial institutions offering their services online, trading mutual funds have never been easier. You can buy and sell assets through your brokerage firm’s website or app.

To buy a specific mutual fund, you need to take note of its trading symbol. For example, one of the current top mutual funds in the U.S., Fidelity Contrafund, is traded under FCNTX.

Monitor Your Portfolio

Viktoriia Hnatiuk/Shutterstock: Checking your portfolio every day isn’t recommended as it can be discouraging to see daily fluctuations in value

Once you’ve made your investments, the only thing left to do is leave it to grow over a period of time. While its value would likely go up and down in the coming months or years, you’d want to focus on the gains your mutual funds would accumulate over decades.