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Top 10 Mutual Fund Terms

By Dustin Woodard, About.com

There's no secret that the mutual fund industry has its own jargon. These are what I consider the 10 most important terms to know when it comes to mutual fund investing.

1. Mutual Fund

You are not going to get very far in mutual fund investing if you don't understand what a mutual fund is.

2. Annual Return

The first thing you are going to see mutual fund companies doing, is touting their returns. There are a few ways to measure a fund's return - be sure you know the differences.

3. Expense Ratio

Expense ratios are probably the most important ratio when it comes to mutual fund investing. Don't buy a mutual fund until you understand what an expense ratio is.

4. Net Asset Value

Mutual fund prices are measured by Net Asset Value or NAV. NAVs are calculated and published every day. They are easy to understand, but come with their own suprises.

5. Fund Style

"Styles" mean a lot of different things in the investing world. Find out why style is an important factor in fund investing.

6. Index Fund

Index funds should be a part of every portfolio. Learn what they are and what makes them such a great investment.

7. Turnover Ratio

Depending on your situation, this ratio may be a key piece of data in the mutual fund selection process. This ratio is especially important in taxable accounts.

8. Fund Prospectus

By law, all mutual fund companies are required to provide you with a prospectus before you invest. Learn what a prospectus is and what you should do with it.

9. Load

Loads are something to watch out for. They come in many shapes and forms (back-end, front-end). Be sure to learn what a load is before you invest in a mutual fund.

10. Money Market Funds

Looking for a safe place to stash your cash? Money market funds are a great place. Find out why.

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