In the rush to be a part of the exciting and profitable world of mutual fund investing, many investors and investees make mistakes. Foibles are human nature, but they can and should be avoided when it comes to people’s futures. Here are a few helpful tips in avoiding the common mistakes that many new to mutual funds make.

1) Stuck on the Past

First off, inexperienced investors sometimes only look at a mutual funds previous performance and not at the possible future. Sure, a stock or mutual funds performance in the past is a good sign of how its been managed. It is usually a good sign to surround yourself with people who know what their doing, but you have to take the current state of the market into account. For example, funds that may have been heavy on dot com’s did great in 1998 and 1999, but if you had a fund that was heavy in tech stocks in 2000, you probably lost your shirt. Past performance doesn’t mean as much as people think it does, and you would be wise to not put as much emphasis on it when you go to invest.

2) Percent Fee Forgetful

While the percentages listed in the prospectus might seem low, operating expenses for mutual funds really do matter. If you’re looking at a fund that might have a higher than average percent fee for running the fund you might want to look at other funds instead. Most market experts think that the percentage of returns over the next few years will be down, and so that fee for running the fund takes a bigger and bigger bite out of your profit. It may not seem like much, but it can really add up over time, especially if profits are down.

3) Particip-Action

A small but important part of investing is checking out what your fund manager has on their plate. Do your part to stay informed. How? This can be done by checking the prospectus the fund company sends you. If you don’t have one of these, ask for one.
Remember, if your fund is skyrocketing, it’s likely that the fund manager who is overseeing it is going to get more funds to manage or a promotion to look over an entire group of funds. This could likely take away from the time they have to look over YOUR fund. While we wish fund managers all the luck in the world in their career, you want someone who is going to be focused on making money for you. Part of that is a dialogue to make sure you’re needs are being met. Remember you are part of the solution.

So with this conversation in mind, remember to ask questions. As long as there are people investing in mutual funds, there will be mistakes made. While they can’t be avoided completely, a few common sense tips can help you avoid the biggies and keep your money working for you. When considering the history of your investments and where you intend to take them, consider: forward thinking, percentage mindful, and active investor strategies to take you to where you want to be.