Three questions to ask when shopping for an investment

Investors who pay attention only to a fund’s return are missing out on valuable information. Determining how a fund achieved its returns can be just as important as analyzing the returns themselves. Evaluating a fund properly not only helps you compare it with other funds; it lets you see whether a fund matches your investing needs and how it would complement your other investments. If you’re in the market for a mutual fund or other investment vehicle, ask yourself these three questions before you make a decision: What is the investment objective? For some investors, analyzing a mutual fund basically consists of looking at historical returns. However, any analysis really should start with a fund’s investment objective. More than any other factor, this will determine the role a specific fund might play in your portfolio and how well it fits with your financial goals. There are three basic investing objectives: growth, income, and capital preservation. Growth investments are typically expected to appreciate in value over the long term. Income investments offer regular payments of income. Investments that focus on capital preservation won’t increase much in value, but they are the least likely to lose value and typically can be easily