Questions and Answers
 What is a mutual
fund?
Why do people use mutual
funds?
Are there disadvantages to
investing in a mutual fund?
What is "Net Asset
Value"?
Can mutual fund performance
be guaranteed?
What is a
prospectus?
What do mutual funds invest
in?
What is a "load"?
Where can I get comparative
information on mutual funds?
How do I put a mutual fund
in an IRA?
What is a mutual
fund?
A mutual fund is an investment corporation that chooses
groups of stocks and sells shares of itself as a single
investment, or package. The Fund, or corporation, passes
the gains, losses and taxability along to its
shareholders, offering the advantage of owning a variety
of stocks as a way to lower an investor's risk, gain
diversification and hire professional money
management.
Top
Why do people use mutual
funds?
Mutual funds provide diversification (an investment term
for "not putting all your eggs in one basket"). A fund
typically owns a few dozen to hundreds of stocks. Also,
by pooling funds from many investors, full-time
professional money managers can be hired to oversee the
investments. Most people cannot afford to actively invest
and monitor their investments on a full-time basis.
Top
Are there disadvantages to
investing in a mutual fund?
Almost every investment in the market involves a certain
amount of speculation and risk. Mutual funds are no
exception. For example, the purchase of fund shares at
the wrong time can subject the buyer to varying tax
consequences. We recommend you speak with a qualified tax
advisor about how your participation in a mutual fund can
affect your tax liabilities. There are also expenses
related to fund management and brokerage charges that
vary from fund to fund.
Top
What is "Net Asset
Value"?
The Net Asset Value (NAV) is the current value of a share
in a mutual fund and is computed by dividing the value of
the Fund's net assets by the total number of outstanding
shares. The NAV is calculated at the end of each trading
day so that investors can put their money in or get it
out on a daily basis.
Top
Can mutual fund performance be
guaranteed?
No. Like any investment, mutual fund performance is
subject to a wide variety of market conditions and past
performance is no guarantee of future results. Fund
shares are neither backed nor guaranteed by the FDIC or
any other government agency.
Top
What is a
prospectus?
A prospectus is a document containing descriptions of the
fund's operations, including: fees, investment objective,
how to buy & sell shares, investment manager, risks,
dividend distributions, and other services. A mutual fund
is required to provide a prospectus to investors. We urge
you to read the prospectus carefully before investing or
sending money. You may download an Ameristock Funds
prospectus here.
Top
What do mutual funds invest
in?
Almost anything, though many have strategies that direct
their investments to different areas. For example, the
Ameristock Mutual Fund invests in large, American
companies. Other funds invest in small companies,
overseas companies, bonds, money markets...almost
anything investors could want to invest in. That's why
it's important to match your goals and risk tolerance to
the different types of funds available.
Top
What is a
"load"?
A "load" is a sales charge that a broker or financial
advisor charges for their service. "Front-end" loads take
their fee when you buy the fund and "Back-end" loads take
their fee if you get out early, or in the form of a 12b-1
fee. Note: The Ameristock Mutual Fund is a "no-load"
fund: there are no sales charges for buying into it or
selling out your shares.
Top
Where can I get comparative
information on mutual funds?
Brokers and financial advisors offer information, but
they usually give information only about load funds.
However, many newspapers and magazines (Barron's, Money,
Forbes, Fortune, Business Week, Mutual Funds Magazine,
Smart Money) cover mutual funds regularly and have
special issues annually reviewing the best funds. Also,
there are a number of online resources that offer
comparisons of the various funds available.
Top
How do I put a mutual fund in
an IRA?
Most funds have a bank or trust company arranged to be an
IRA custodian for any IRA shareholders. The custodian
usually charges between $15 and $25 per fund account per
year. This can often be a significant expense for small
accounts.
Alternatively, you can purchase mutual funds within a
brokerage account IRA. This would be similar to using a
broker to buy funds normally, but incurs a single IRA
custodian fee (usually between $25 and $50). See your tax
planner or financial advisor about the best way to invest
using IRAs. Note: Ameristock does not have its own IRA
accounts. To invest in Ameristock through an IRA please
request an IRA kit from firms such as TDWaterhouse,
Schwab, Fidelity or eTrade.
Top
Ameristock Funds. Your Place to Be in the
Market.
|
