Mutual funds are a great choice if you want to invest, but it's important you know what you are doing in order to make a smart investment There's no single ‘best' mutual funds company, since a lot depends on the amount you're investing and how involved you want to be in the choice of funds.
That said, there are some factors that potential investors should always look out for when choosing a mutual funds company, such as fees, the range of funds, and the amount of information shared with investors.
Here's a closer look at our top mutual fund companies:
Vanguard is one of the world's largest investment management companies, known for its low-cost mutual funds and exchange-traded funds (ETFs). Founded by John C. Bogle in 1975, Vanguard has become a leader in the industry, focusing on providing investors with high-quality, low-cost investment options.
Fees: Vanguard is renowned for its low expense ratios, which can save investors a significant amount of money over time. The average expense ratio for Vanguard mutual funds is 0.10%, which is considerably lower than the industry average of 0.62%.
Minimum amount to open an account: Vanguard offers a variety of account types, each with its own minimum investment requirement. For most Vanguard mutual funds, the minimum initial investment is $3,000. However, some funds have higher minimums, such as the Vanguard Target Retirement Funds, which require a minimum of $1,000.
Rating with the Better Business Bureau: Vanguard has an A+ rating with the Better Business Bureau (BBB), the highest possible rating. This rating reflects Vanguard's commitment to maintaining high standards of business practices and customer service.
Why We Chose Vanguard: Vanguard's low fees, wide range of investment options, and commitment to putting investors' interests first make it a top choice for many investors. Their unique ownership structure, where the company is owned by its funds, which in turn are owned by their shareholders, ensures that Vanguard's interests are aligned with those of its clients.
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Fidelity is a well-established and respected mutual fund company and brokerage firm that offers a wide range of investment options for individuals and businesses. They are known for their competitive fees, excellent customer service, and user-friendly online platform.
Fees: Fidelity offers some of the lowest fees in the industry, with many of their mutual funds charging no transaction fees. They also have a large selection of commission-free ETFs and zero expense ratio index funds, making it an attractive choice for cost-conscious investors.
Minimum amount to open an account: Fidelity has no minimum balance requirement for opening a brokerage account, making it accessible to investors of all levels. However, some mutual funds may require a minimum initial investment, which can vary depending on the fund.
Rating with the Better Business Bureau: Fidelity has an A+ rating with the Better Business Bureau, indicating a high level of customer satisfaction and a strong commitment to resolving any issues that may arise.
Why We Chose Fidelity: Fidelity stands out for its low fees, extensive research and educational resources, and excellent customer support. They offer a wide range of investment options, including mutual funds, ETFs, stocks, bonds, and more, making it a one-stop-shop for many investors. Their user-friendly online platform and mobile app make it easy to manage your investments on the go.
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Charles Schwab is a well-established and reputable investment company that offers a wide range of mutual funds and brokerage services. As one of the largest mutual fund companies in the United States, Charles Schwab provides investors with access to a diverse selection of funds across various asset classes and investment strategies.
Fees: Charles Schwab is known for its competitive pricing structure. Many of their mutual funds have low expense ratios, which can help investors keep more of their returns. Additionally, Schwab offers commission-free trades for many of their mutual funds, making it an attractive option for cost-conscious investors.
Minimum amount to open an account: Charles Schwab has a low minimum investment requirement of just $1,000 for most of their mutual funds. This relatively low entry point makes it accessible for a broad range of investors, including those who are just starting to build their portfolios.
Rating with the Better Business Bureau: Charles Schwab maintains an A+ rating with the Better Business Bureau, the highest possible rating. This rating reflects the company's commitment to providing excellent customer service, transparency, and ethical business practices.
Why We Chose Charles Schwab: Charles Schwab stands out for its combination of low fees, a wide selection of mutual funds, and excellent customer support. Their user-friendly platform and educational resources make it easy for investors of all levels to manage their portfolios and make informed investment decisions.
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Robinhood is a popular trading app that allows users to invest in stocks, ETFs, options, and cryptocurrencies without paying commissions. The platform has revolutionized the investing landscape by making it accessible to a wider audience, especially younger investors.
Fees: One of the most attractive features of Robinhood is its commission-free trading. Users can buy and sell securities without incurring any fees, which can significantly reduce the cost of investing. However, Robinhood does generate revenue through other means, such as interest on cash balances and premium subscriptions like Robinhood Gold.
Minimum amount to open an account: Robinhood does not require a minimum balance to open an account, making it an attractive option for new investors who may not have large sums of money to invest initially.
Rating with the Better Business Bureau: Robinhood currently holds an "F" rating with the Better Business Bureau due to a high volume of complaints and government actions against the company. The BBB cites concerns regarding the app's reliability, customer service, and transparency.
Why We Chose Robinhood: Robinhood has made investing more accessible by offering commission-free trades and a user-friendly mobile app. It has attracted millions of users, particularly younger investors, who appreciate the platform's simplicity and low costs.
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TD Ameritrade is a well-established online broker that offers a wide range of investment options, including mutual funds, to its clients. They provide a user-friendly platform and extensive research tools to help investors make informed decisions.
Fees: TD Ameritrade offers a variety of no-transaction-fee (NTF) mutual funds, which means investors can buy and sell these funds without incurring any trading fees. However, some mutual funds may have their own expense ratios and management fees, which are charged by the fund companies themselves.
Minimum amount to open an account: TD Ameritrade has no minimum deposit requirement to open an account, making it accessible to investors with various budget sizes.
Rating with the Better Business Bureau: TD Ameritrade maintains an A+ rating with the Better Business Bureau, indicating a strong commitment to customer satisfaction and ethical business practices.
Why We Chose TD Ameritrade: TD Ameritrade stands out for its user-friendly platform, extensive research tools, and wide selection of NTF mutual funds. Their commitment to providing quality customer service and maintaining high ethical standards makes them a reliable choice for mutual fund investors.
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E*Trade is a well-known online brokerage firm that offers a wide range of investment options, including mutual funds. With E*Trade, investors can access over 4,400 mutual funds from various fund families, making it easy to build a diversified portfolio tailored to their specific needs and goals.
Fees: E*Trade offers a selection of no-load, no-transaction-fee (NTF) mutual funds, which means investors can buy and sell these funds without incurring additional charges. However, for mutual funds outside the NTF program, investors may face transaction fees of $19.99 per trade.
Minimum amount to open an account: E*Trade has a low minimum requirement of just $500 to open a Core Portfolios account, which includes a professionally managed portfolio of mutual funds and ETFs. For self-directed accounts, there is no minimum deposit requirement.
Rating with the Better Business Bureau: E*Trade maintains an A- rating with the Better Business Bureau, indicating a good level of customer satisfaction and responsiveness to customer complaints.
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Interactive Brokers is a well-established online brokerage platform catering to active traders, investors, and institutions. They offer a wide range of investment products, including stocks, options, futures, currencies, bonds, and funds, all from a single integrated account.
Fees: Interactive Brokers is known for its low fees and commissions. They charge a low flat rate per share for stock trades, with a minimum of $1 per order. Options trades are also competitively priced at just $0.65 per contract. Their margin rates are among the lowest in the industry.
Minimum amount to open an account: The minimum deposit to open an account with Interactive Brokers is $0 for cash accounts and $2,000 for margin accounts. This relatively low minimum makes it accessible for a wide range of investors.
Rating with the Better Business Bureau: Interactive Brokers maintains an A+ rating with the Better Business Bureau, the highest possible rating. This reflects their commitment to providing a high level of customer service and addressing customer complaints in a satisfactory manner.
Why We Chose Interactive Brokers: Interactive Brokers stands out for its low costs, wide range of tradable securities, and powerful trading platforms. Their advanced technology and tools cater well to active traders and sophisticated investors. The company's strong financial stability and regulatory oversight provide peace of mind for clients.
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Ally Invest is an online brokerage firm that offers a wide range of investment options, including mutual funds. They provide a user-friendly platform for investors to manage their portfolios and make informed decisions.
Fees: Ally Invest stands out for its competitive pricing structure. They charge no commission fees for online stock, ETF, and option trades. As for mutual funds, Ally Invest offers over 100 commission-free mutual funds, while other mutual fund trades carry a reasonable $9.95 commission per trade.
Minimum amount to open an account: One of the most attractive features of Ally Invest is its low minimum deposit requirement. You can open an account with as little as $0, making it accessible for investors with various budget levels.
Rating with the Better Business Bureau: Ally Invest maintains an impressive A+ rating with the Better Business Bureau, indicating their commitment to providing excellent customer service and addressing client concerns promptly and effectively.
Why We Chose Ally Invest: Ally Invest is an excellent choice for mutual fund investors due to its wide selection of commission-free mutual funds, low fees, and user-friendly platform. The low minimum deposit requirement makes it an accessible option for both new and experienced investors.
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BlackRock is one of the world's leading investment management firms, offering a wide range of mutual funds and ETFs to meet various investment goals. With over $8 trillion in assets under management, BlackRock has established itself as a trusted name in the financial industry.
Fees: BlackRock's mutual fund fees vary depending on the specific fund and share class. Expense ratios for their funds range from as low as 0.05% for some index funds to over 1% for actively managed funds. It's essential to review the fees associated with each fund before investing.
Minimum amount to open an account: The minimum initial investment for BlackRock's mutual funds varies by fund and share class. Some funds have a minimum of $1,000, while others may require $2,500 or more. Institutional share classes often have higher minimum investment requirements.
Rating with the Better Business Bureau: BlackRock has an A+ rating with the Better Business Bureau (BBB), indicating a strong commitment to customer satisfaction and ethical business practices.
Why We Chose BlackRock: BlackRock offers a diverse array of well-performing mutual funds and ETFs, making it easy for investors to find products that align with their investment objectives and risk tolerance. The company's global presence and extensive research capabilities provide investors with access to a wide range of investment opportunities.
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JP Morgan is a well-established financial institution offering a wide range of mutual funds and brokerage services. With a long history and global presence, JP Morgan has built a reputation for providing quality investment options and professional guidance to its clients.
Fees: JP Morgan's fees vary depending on the specific mutual fund or brokerage service. Generally, their mutual fund expense ratios are competitive within the industry, ranging from 0.5% to 1.5%. However, some specialized funds may have higher fees. Brokerage fees are typically in line with other major brokers, with commissions starting at $9.99 per trade.
Minimum amount to open an account: The minimum investment required to open a JP Morgan brokerage account is $0, making it accessible to a wide range of investors. For mutual funds, the minimum initial investment varies by fund, but many options start at $1,000.
Rating with the Better Business Bureau: JP Morgan maintains an A+ rating with the Better Business Bureau, demonstrating their commitment to customer satisfaction and ethical business practices.
Why We Chose JP Morgan: JP Morgan offers a diverse selection of mutual funds and brokerage services, catering to various investment goals and risk tolerances. Their experienced professionals provide guidance and support to help clients make informed investment decisions. With competitive fees and a user-friendly platform, JP Morgan is a solid choice for both novice and experienced investors.
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After familiarizing yourself with the basics, the real challenge begins: choosing the type of mutual fund that aligns with your investment objectives. Start by assessing your risk tolerance. Generally, investments offering the potential for substantial returns, such as high-yield mutual funds and most stock investments, also carry a higher degree of risk compared to investments providing more modest returns. If you have a low risk tolerance, steer clear of mutual funds that invest in highly volatile securities or employ aggressive investment strategies aimed at outperforming the market. Since mutual funds are typically designed to be diversified investment vehicles, they often carry lower levels of risk compared to individual stock investments.
Next, determine your investment goals. If you're seeking consistent annual income, opt for a mutual fund that pays dividends or a bond fund. To minimize the short-term tax impact of your investment, choose a fund that makes minimal annual distributions, doesn't pay dividends, and prioritizes long-term growth. If your primary objective is to build wealth quickly, even if it entails increased risk, consider high-yield bonds or equity funds.
When selecting an actively managed fund, as opposed to a passively managed indexed fund, investigate the track record of the fund's manager. The success of actively managed funds relies on the experience, skill, and instinct of the fund's manager, so the historical returns generated by other funds under their management serve as a good indicator of their expertise. Keep in mind that most actively managed funds carry higher fees than their passively managed counterparts.
The most common ways to buy a mutual fund online are directly from a fund provider, through an investment company, or via an online brokerage.
Once you have a funded account through an online brokerage or investment firm, initiate an order and provide essential information such as the investment amount and the mutual fund's ticker symbol. Mutual fund purchases are executed once per day after the market closes, and it typically takes one to two additional days for the transaction to settle.
Investors have access to a vast array of mutual funds. However, not every online account and service will offer access to all of these funds. Before making a purchase, carefully consider the purpose of your investment and your goals. Evaluate your risk tolerance in relation to the level of risk associated with the fund. Be aware of the fees and other costs involved, and determine if there are suitable alternative funds that may be more cost-effective.
No matter how little or how much you're planning to invest, you can find a mutual fund company which helps you to begin investing. With plenty of research and information, a range of fund options, and many different fee levels, there’s a mutual funds company for every investor.
