If you are considering investing in mutual funds, changing mutual funds or selling the mutual funds that you already have there are several questions that should be answered before you make your decision.
Mutual funds are essentially packages of different investments, many times of different types. Buying into a mutual fund can save you a great deal of trouble in researching individual stocks and other investments. You still need to do research, however, and spend a lot of time in the newspapers, financial magazines and on the Internet.
Each mutual fund is different. Some funds invest in one sector, like energy funds, while others invest in stocks, bonds, Money Market, currency speculation. Each of these funds has their own level of risk involved. Each fund publishes a prospectus, detailing exactly what types of investments that the fund deals with, the funds financial history, and the financial goals of the various investors. If the prospectus is a plan that closely matches your plan, this might be a good mutual fund for you to invest in. If you are young and can stand to lose money, you might want consider a plan with more risk but a higher payoff. If you are close to retirement and want to eliminate as much risk as possible so you might be more likely to invest in a fund that deals with mostly bonds or Blue Chip stocks.
If a fund can offer a higher return on your investment than other options it could be a good time to buy. You can use indexes like the S & P 500 to learn the average return on each fund. If a fund can average more than a 10% return, over a 10 year period this is better than average. Keep in mind though that mutual funds charge about 1% for it's costs and some funds have other administrative fees as well. Taxes will also take a piece of your return and this has to be factored in to your decision.
How easy is it to get into the fund? Some funds require a minimum buy-in that can be several thousand dollars. How much experience does the fund manager have?
If, before you invest in a fund, you see that it isn't in line with your financial goals, shop around some more. There are literally thousands of mutual funds available, so you can eventually find one that matches your needs. Keep a daily eye on the fund also. If you see it losing ground or making investment moves that are out of line with either the fund's prospectus or your personal goals, it's time to move on to another fund or other types of investments.