You are considering investing in either a no-load mutual fund that focuses on growth stocks or an index mutual find. When ignoring expenses incurred by the mutual funds, you expect that the growth fund will generate an annual return of 9 percent versus an annual return of 8 percent for the index fund.
You invest in an equity income fund focused on large, well-established stocks that pay high dividends. You also invest in a growth fund focused on young firms that are attempting to expand and therefore pay no dividends.
You are curious about your tax liabilities on distributions from these investments.
Financial Planning Online: Online Services by Mutual Funds
Go to: http://www.vanguard.com
This Web site provides an example of what an investment company that manages mutual funds can provide online to its customers. You can monitor your account online and transfer money from one fund to another within the same family.
Diversification through mutual fund supermarkets: an arrangement offered by some brokerage firms that enables investors to diversify among various mutual funds and to receive a summary consolidated statement for these funds
Diversification Among Mutual Funds Exhibit 17.10: Diversifying among Mutual Funds That Are Primarily Affected by Different Factors
Financial Planning Online: Diversifying among Mutual Funds
Go to: http://www.mfea.com
Click on: Asset Allocation
This Web site provides suggested asset allocation models that fit your financial situation and your degree of risk tolerance.
How Mutual Funds Fit within Your Financial Plan
Key decisions about mutual funds for your financial plan are: