Course 105: How to Purchase a Fund
Go-It-Alone, Version 1
In this course
1 Introduction
2 Want Some Help?
3 Go-It-Alone, Version 1
4 Go-It-Alone, Version 2

Those with the time and interest to learn about investing and to monitor their own portfolios can invest in funds without the help of an advisor. If you choose to invest on your own, focus on no-load funds, which do not charge any sales commissions. Why pay a commission if you're not getting any investment advice in return?

Go-it-alone types can buy funds directly from no-load fund groups (also called fund families) such as Fidelity, Vanguard, and T. Rowe Price. (Fidelity runs load funds, too.) To buy a fund from a fund family, request an application from the fund group by calling its 800 number. You can find these numbers on Morningstar.com's fund data reports. Most fund families provide prospectuses and applications on their Web sites, as well.

New investors who plan to buy more than one fund might choose one of the larger no-load families. Why? Because these families are diversified: They offer stock and bond funds, domestic and international funds, and large- and small-company funds. Take it from us: Most fund investors eventually own more than one fund because of the need for diversification; by investing with one of the major fund families, you can easily transfer assets from one fund to another.

Investing with a single fund family—even a large one—can be limiting, though. For example, some families don't offer a wide array of funds. Take PIMCO, for example. The group specializes in fixed-income investing, but the company offers few stock funds.

Another way to diversify, then, is to invest with several fund families, a series of specialists who do one thing particularly well. You could buy a large-company growth fund from, say, Jensen, a small-company fund from Royce Funds, a bond fund from PIMCO, and an international fund from Tweedy, Browne. But that would mean a lot of paperwork; each family would send you separate account and tax statements. If you own more than a few funds, the paperwork can become maddening.

Next: Go-It-Alone, Version 2 >>


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