Reference from Secret of self made millionaire

In Secret of self made millionaires, the Author Adam Khoo mentioned that, Most of the Mutual funds lose money and only the mutual fund managers are the one made money! So this is the fact that most of us must know before select a mutual fund. In US mutual fund only about 10% actually beat the S&P 500 each year. So what we going to find here is the 10% that beat S&P 500!

The following are brief summary of the main steps to select a profitable mutual fund, for those who really interested in mutual funds investment I suggest to get a copy of secret of self made millionaire or secret of millionaire investors! These are the 2 books that i own and find the information provided useful and practical. So here goes nothing, there are mainly 5 steps to find a profitable mutual fund:

Step 1:
Go to www.morningstar.com and click on funds. Next from morning star tool, click on Mutual Fund screener.

Step 2:
Enter all the following criteria into the screener

Under Fund type: Manager Tenure >5 years
Under Cost and Purchase: no-load funds only
Expenses ratio < category average
Under rating and risk = 4 & 5 stars rating
Under Morning Star risk = better than equal to below average
Under return of funds: greater or equal to S&P 500 in all period: 1,3,5,10-year return
Under Portfolio, total assets less than or equal to $5billion then click show results.

Step 3:
Rank all the funds from best to worst by clicking Score these Results. After that set the following criteria:
10 for high 3 year return, high earning growth rate, high YTD return, high 5-year return and high star rating
5 for low expense ratio and low PE
(Select the funds listed for the following steps)

Step 4:
Go to www.moneycentral.com and use the research wizard to run all the funds which will tell us the details about each funds to confirm if it meet our four major screens. Any funds that fail, remove from the buy list. After running then pick the top 5 funds.

Step 5:
Lastly is to check the 5 selected fund, whether it is overvalued and as well as the purchase information. This can be check by using www.moneycentral.com research wizard by clicking snapshot and top left hand corner. Check the PE ratio, PE ratio of more than 20 usually indicate overvalued and finally check for the purchase information.

So that it. The five steps that we need to know to select profitable mutual funds. So it is actually very simple few steps with all the tools provided. All you need is the secret and method of using these tools and now i have given you the method, you can start venturing into world of investment!