What Is the Biggest Mistake Investors Make When Evaluating a Fund?

The Wall Street Journal asked a number of investment professionals and here are some of the answers.

  • Picking funds based on their past performance
  • Investing in a mutual fund without having the slightest idea what’s inside it (particularly target date funds)
  • Choosing a fund based on the number of “stars” it has.
  • Focus on recent performance.   Only 4.69{030251e622a83165372097b752b1e1477acc3e16319689a4bdeb1497eb0fac93} of all domestic funds kept their top-quartile rankings for the three
    consecutive 12-month periods.
  • Too much emphasis on expenses.  Ultimately the purpose of investing is to make money, not to save it.

All good advice.

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