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What are high dividend yield mutual funds?
What are high dividend yield mutual funds, and why are these investment options popular with so many investors? These are mutual funds which specialize in high dividend yield holdings, and normally see an above average return which is more than three to four percent at the minimum. When you invest in a mutual fund you are pooling your investment capital together with capital from other investors, and a fund manager makes investment decisions for shareholders including yourself. When you invest in a mutual fund then you own shares in the fund, and these funds can include any holdings and risk levels. You will own a percentage of the mutual fund, and are affected by the fund performance. If the value of the fund goes up then you will see the value of your shares increase, and the opposite is also true. If the mutual fund value drops then your share value will also drop. High dividend yield mutual funds are mutual funds that normally will consistently pay out dividends in high percentages, which means excellent returns as an investor. These funds may also carry higher risks as well though, and only careful evaluation can help determine whether this is true with a specific mutual fund.
High dividend yield mutual funds can be a good or bad choice, depending on the fund being evaluated. You should be careful and use caution though, because if a fund has a return of more than ten or fifteen percent all the time this can be a sign that there may be an underlying problem or issue. Instead look for funds that offer high but realistic yields on a regular basis, without performing suspiciously well. Mutual funds can be a great way to get a very diverse portfolio with a single investment, and this eliminates the time and effort needed to buy individual holdings and build up a diverse portfolio. High dividend yield mutual funds offer higher than normal dividends, so you can get a better than normal return on your investment some of the time. These investments are not foolproof though, and you can still see losses with high dividend yield mutual funds. That is why research and fund evaluation are critical no matter what type of mutual fund you are looking at.
High dividend yield mutual funds come in two categories, load and no load funds. No load funds do not involve any load fees, which are basically commissions paid to a broker or agent and are not necessary. No load funds do not include these fees, and the 12b fund expenses must be kept below a specific percentage. No load funds are usually a better choice, unless you like paying extra for no reason at all as long as you are capable of choosing your own funds to invest in. Choosing no load options and doing your homework before deciding on high dividend yield mutual funds to invest in can help you make informed and intelligent investment decisions. These fund choices may or may not be the right ones for your specific investing goals and circumstances.
The information supplied in this article is not to be considered as medical advice and is for educational purposes only.
|Mutual Funds Investment13 May 2010|