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Mutual Funds

Your Guide to Investing in Mutual Funds

Use the new Kiplinger 25 and our suggested portfolios to accomplish your dreams. Plus: Understanding the ins and outs of mutual-fund investing.

Investing in no-load mutual funds is a great way to achieve your goals -- whether you're preparing for retirement, saving for your child's college education or hoping to buy your first home. But how do you choose from the roughly 8,000 funds available?

That's where The 25 Best Mutual Funds comes in. Each year, we assemble a list of our favorite no-load funds -- the best stock and bond funds you can buy without paying sales fees. The Kiplinger 25 isn't a mere rehash of the funds with the best past performance. Instead, we get in the trenches, examining not only a fund's long-term performance compared with similar funds but also its risk level, annual expenses and manager's experience. We spend months getting to know fund managers, learning their strategies and whether they have a stable, disciplined investment process.

Our picks employ a range of styles. Some of the funds emphasize small and midsize firms, others focus on large companies. Some invest mainly in out-of-favor companies, others in fast-growing firms. Four of our picks are international funds. We also select five bond funds.

But a list of great funds is only useful if you know how to combine the elements into an diversified investment mix. We put it all together by assembling our picks into suggested portfolios designed to meet short-term, mid-term and long-term goals.

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If you keep up with the Kiplinger 25 every year, you'll notice some changes from our 2005 list. For the reasoning behind this year's picks -- and why some funds have been eliminated since last year -- see Steven Goldberg's Value Added column, Kiplinger 25: What's In, What's Out. We also offer an update of how last year's Kiplinger 25 performed.


Understanding mutual funds

Following our suggested portfolios makes it easy. But knowing the basics for yourself will help you become a smarter, better investor. Our mutual fund tutorial, a collection of stories from the latest Kiplinger's Mutual Funds special issue, explains the ins and outs of mutual funds -- discussing what to look for when buying or selling a fund and how to plan for your own dreams.

A Plan for Achieving Your Goals
The 8 rules for assembling and maintaining a fund portfolio.

8 Virtues of Great Funds
Signposts of excellence to judge funds you own or are considering.

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Thinking Outside the Box
A discussion of investment styles -- and whether mangers should be required to invest within narrowly defined limits.

Breaking Up Is Hard to Do
Five reasons to sell a fund.

Real Simple Investing
If you're petrified about making the wrong decision, or simply don't have time to manage your portfolio, a one-stop target-retirement fund or lifestyle fund can provide the diversification and safety you need.