The amount they make for the investors is called the fund's annualized total return. This figure is usually given in percentage terms. Even though most funds only publish average returns, the actual returns each year are probably the best way to see how much the fund's returns move up or down. Advertisements, rankings, and ratings tell you how well a fund has performed in the past. The more you study mutual funds, however, the more you will realize that a fund's past performance is not as important as you might think.
Studies show that future returns can be quite different from historical returns.
We want to tell you from the outset that we don't consider mutual funds very Teenvestor-friendly. Another reason why we don't think mutual funds are Teenvestor-friendly is that figuring out how much tax you owe on the money you make with your mutual fund investments can be complicated. If you own many varieties of mutual funds and you buy and sell shares frequently, you and your parents will probably have to consult an accountant. If you do choose to invest in mutual funds, you should stick to those funds that invest in stocks since, as we discussed earlier, stocks generally can make more money for you over a long period of time. When we speak of the value of a share of stock, we say that it is worth a specific dollar amount.