Top 10 Mutual Fund FAQsHaving run the About.com Mutual Fund site since 2001, I've been asked hundreds of questions. Below I've listed the basic questions I most commonly answer, plus provide links to more information about the topic. Mutual funds aren't exactly something you learn about when growing up, nor are they the easiest thing to understand. I've received a lot of great feedback from 401(k) administrators and fund investors on the article I link to above. People seem to understand what stocks are, but they often wonder why they should use mutual funds. Why should they pay someone to pick stocks for them? Learn what advantages fund investing has over stock picking. Fund prices are listed as NAVs - or net asset values. It might sound complicated, but it is really quite simple. There are many companies ready to sell you mutual funds, but due to a wide variety of fee structures, some companies are better suited to sell you mutual funds than others. Sometimes parting with a mutual fund can be a difficult task. Other times it can be quite easy. More often than not, investors tend to sell their mutual fund holdings for the wrong reasons. When people talk about "mutual funds," they generally mean open-ended mutual funds. Closed-end funds are a different beast and really are more similar to stocks. Funds are great for your 401(k). However, not all 401(k)s carry great funds and not all funds are right for you. People always want the inside information, so whenever I tell people I write about mutual funds, the inevitably ask me "what's hot?", but the real question should be, "what is hot enough to burn my money the quickest?" The short answer is: something you should avoid. No-load fund investing is popular among knowledgable investors for a reason. Funds are required to pay capital gains each year, which means fund investors are often confused as to why a fund with a negative return for the year could possibly pay out distributions which end up being a taxable event for the fund investor. | 
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