Good mutual fund returns are hard to come by these days. Most actively managed funds are don't give their investors market-beating returns. It shouldn't come as a surprise though. Regulations have have helped this industry (and also hurt it), and as a result, this has dragged down returns for many individuals.
There are some ways that you can try to get better returns from your mutual fund, but, don't look for these products to be the silver bullet for your retirement that they are pitched as.
You can boost the returns on your mutual funds by not paying attention to past performance numbers that are posted by the fund company. These are, many times, inflated. By using simple averages instead of compound averages and effective yields, the fund can show you returns that are higher than the actual returns posted by the fund.
If you have a scientific calculator or a lot of time on your hands to do it manually, you can calculate the compounded return over time for these (or any) investment.
The second step in increasing your mutual fund's return may be just to dump the fund. I know that's not really boosting the return of the fund, but you may be better off investing in something else. Actually, that's one of the basic rules of investing: understand what you are investing in. Unless you understand every business that that mutual fund holds, you are asking for trouble. You're not being a smart investor, you're just guessing.
The last "tip" on boosting your mutual fund returns is to choose mutual funds that invest in smaller capitalization companies or choose funds that are relatively small in size. A smaller mutual fund would probably be the essential point here. Small funds have more places that they can invest in. It's also easier for a $10 million fund to double in size than it is for a $100 million. - 15224
There are some ways that you can try to get better returns from your mutual fund, but, don't look for these products to be the silver bullet for your retirement that they are pitched as.
You can boost the returns on your mutual funds by not paying attention to past performance numbers that are posted by the fund company. These are, many times, inflated. By using simple averages instead of compound averages and effective yields, the fund can show you returns that are higher than the actual returns posted by the fund.
If you have a scientific calculator or a lot of time on your hands to do it manually, you can calculate the compounded return over time for these (or any) investment.
The second step in increasing your mutual fund's return may be just to dump the fund. I know that's not really boosting the return of the fund, but you may be better off investing in something else. Actually, that's one of the basic rules of investing: understand what you are investing in. Unless you understand every business that that mutual fund holds, you are asking for trouble. You're not being a smart investor, you're just guessing.
The last "tip" on boosting your mutual fund returns is to choose mutual funds that invest in smaller capitalization companies or choose funds that are relatively small in size. A smaller mutual fund would probably be the essential point here. Small funds have more places that they can invest in. It's also easier for a $10 million fund to double in size than it is for a $100 million. - 15224
About the Author:
Author information: David Lewis, RFA is a professional financial adviser. If you would like more detailed information about any aspect of personal finance, please visit David's website.
