Even though the basic idea of mutual fund analysis is not really complicated, actually doing mutual fund analyses can become rather involved for the serious investor.  Most people, however, are novice investors who just want to earn a decent return on their money. If that sounds like you, even having a little bit of knowledge about mutual fund analysis might go a long way in helping you make a little extra for a nest egg, a house, a boat, or whatever you have in mind.

Two important aspects of analyzing a mutual fund are what it is and what has it done (and not just lately).  As far as what a particular mutual fund is, one fund could have stocks mostly from small companies (which is a pretty general fund) and another could have stocks mostly from energy companies (which is a pretty specific fund).   Also, a mutual fund might be fairly new, say one or two years old, or it might have been around for a while, say 20 or 30 years.  Another aspect of a particular fund could be how much money you need to invest to buy shares.  Some mutual funds may need $500 to invest while other funds might require an investment of $10,000 more.  Something else to consider about a mutual fund is who runs it and how much experience he or she has.

Of course how a mutual fund performs is what really makes your money grow. That's where a lot of charts, graphs and number crunching come in to play.   You can learn about percentages of return or loss, shares bought and sold, comparisons with other funds, and just about any numerical information you can think of. How much money you make can also be affected by fees, surcharges, and expenses that a mutual fund has.  Mutual fund companies have to make their money somehow, and a lot of it comes from mutual fund charges. At this point you can become overwhelmed with the amount of data that you can get from a mutual fund analysis. You might just want to put money in a fund with a graph that keeps pointing up, but don’t forget that what goes up must come down in the real world and in the financial world. 

So what is the best way to sort through a mutual fund analysis? Well, there really is not a set answer, but good places for help are out there.   For example, you should request a prospectus from any mutual fund company with whom you are thinking of investing.   A prospectus gives an overview of what the fund is with some details about its performance.   If you want to get more information about fund performance, then you can request an annual report.  A broker or financial advisor can give investment advice, but they might ask for a fee.  Some books can provide good information about mutual funds without requiring a lot of financial expertise.  Even if you're not ready to use real money, you can always do imaginary investing at first to see if your mutual fund analysis paid off.