These mutual funds are designed to make investing for retirement (or other goals) super simple. You select the fund based on the year closest to when you want to retire. For example, if you’re 25 in 2018 and want to retire at 65, you would invest in a 2058 target date fund. The fund’s managers then automatically rebalance the fund’s investments based on that date, growing more conservative as you get older.

How to invest in a Mutual Fund

Buying shares of a mutual fund is easy; there are a few ways to go. If you have a 401(k) or other retirement plan at work, chances are you already own a mutual fund or two. The easiest way to invest in mutual funds is to select one within your 401(k) or other employer-sponsored retirement account.

You can buy and sell mutual funds through any online stock broker. Online brokerages provide the easiest way to trade any kind of investment—mutual funds, exchange-traded funds, stocks, bonds etc. They also offer lots of free research tools. The downside is that they charge commissions every time you buy or sell shares of an investment. This can get expensive, especially for new investors.

You can open a mutual fund account or IRA directly with a mutual fund company. (These include Vanguard, Fidelity, TIAA-CREF, T. Rowe Price, and many others).The good thing about investing this way is that you won’t have to pay a trade commission to buy or sell shares of your mutual fund, and most fund companies have automatic investing plans allowing you to start investing as little as $50 a month.

Related: Hedge Funds, Mutual Funds, and ETFs Explained in 1 Minute

The downside to investing directly with a mutual fund company is that you’re limited to that company’s mutual funds. So if you someday want to invest in other company’s funds or buy individual stocks, you will have to open a second account somewhere else. (There are some exceptions. Fidelity and Vanguard, for example, have brokerages.)If you’re new to investing, I recommend making regular monthly contributions directly to a mutual fund. Saving for retirement,?

Set up a Roth IRA account

If you’re saving for a shorter-term goal, set up a regular, taxable mutual fund account. This approach (called dollar cost averaging for investing nerds) has two benefits: When you enroll in automatic investing directly with a fund company, you avoid per-transaction trade commissions.

By purchasing the fund in small monthly increments (rather than as a lump sum), you take advantage of ups and downs in the market. This eliminates the risk that you’ll buy a lot of shares at a high price. Using dollar cost averaging you’ll purchase more shares at lower prices and this will give you a better return over time.


Mutual funds can be scary to think about, but they’re one of the best investment vehicles. Plus, they’re one of the cheapest options for beginner investors.

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