When it comes to investing, the most common method for investors is to buy shares in mutual funds. There are three different ways you can purchase shares of a mutual fund:
Through Your Brokerage
If you have a brokerage account, such as a stock brokerage account or a Roth IRA or a traditional retirement account with a brokerage like Charles Schwab or Merrill, you can buy most mutual funds just like you buy stocks. The easiest way to do this is through the brokerage’s website. Many online brokers are currently offering free trades, including for buying mutual funds, and they typically do not require you to have a certain minimum balance. You may pay a commission or a flat fee when purchasing. These fees are referred to as “loads.” There are many funds available that do not impose loads, so you should do your own research and find a fund that has no loads to meet your current investment needs, whether that means increasing your exposure to Asian stocks or looking for high-dividend companies. You should also keep in mind that the brokerage may have its own set of proprietary funds or a network of affiliated funds that your personal broker may have an incentive to sell to you. You need to carefully consider whether these proprietary offerings are the best choices for you.
Directly from the Mutual Fund Company
If you know you want to invest your money in a specific mutual fund or in mutual funds that are part of a larger mutual fund family, you can often open an account directly with the mutual fund company itself. You can begin moving money online or fill out paperwork and send it by mail with a check. You will also need to inform the company whether you want to open a regular account or a retirement account such as a Roth IRA or a traditional retirement account. You can even set it up so that the mutual fund automatically invests for you by regularly withdrawing money from your checking or savings account each month. This systematic investment leads to dollar-cost averaging and can be a helpful way to smooth out the average price you pay for shares in your mutual fund and may help mitigate the risk of having put most of your money into the market at a peak, such as just before the dot-com crash or the Wall Street collapse that began the Great Recession in 2008. The biggest advantage of buying shares directly from the mutual fund company itself is that you are less likely to be charged a commission or fee, meaning more money goes into your investments and works for you.
Through a 401(k) Retirement Plan or Other Employer Retirement Plan
If you work for a company that has more than a handful of employees, you likely have the option to put money into a 401(k) retirement plan or a similar retirement plan. In most cases, the main investment options will be mutual funds.
The downside of a 401(k) plan is that you are likely to have a limited list of potential mutual fund investments, some of which may be unsatisfactory. However, if your employer matches a percentage of the money you invest from your paycheck, a 401(k) retirement plan is often a wise investment option to take advantage of.
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It is good to be aware of the different ways to buy shares of a mutual fund. You should evaluate your current investment needs and look for the option that suits you best.
Source: https://www.thebalancemoney.com/how-do-i-buy-shares-of-a-mutual-fund-357941
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