If it were a perfect world, the sky would always be blue, everyone would be skinny and healthy and Warren Buffet would manage my stock portfolio.

It NOT being a perfect world, I guess I will have to put up with occasional thunderstorms and I will have to learn to stay on a diet; however, there IS a way to get investment returns like Warren Buffet. Two ways, actually.

The first, and most obvious thing you could do is buy shares of his company, Berkshire Hathaway. Since Warren is the chief stock picker for this company, literally he will be investing your money, along with his own and that of the other shareholders. Of course, their is a small problem… one share of this company is currently selling for about $140,000.00 (!).

Yeah, that stinks.

The other thing you could do is invest in a mutual fund that owns Berkshire, or buy shares in a mutual fund that holds the same stocks. A few such funds can be found in this post over at the Motley Fool.

When investing into mutual funds a lot of people are not sure if they should opt for load or no-load mutual fund, so I’d like to briefly explain what these two terms mean.

“Load” refers to the commission paid to the broker who sells you the fund. “No load” means there is no commission to be paid on the purchase or sale of fund shares. No load is a mutual fund whose shares are sold without a commission or sales charge.

The reason for this is that the shares are distributed directly by the investment company, instead of going through a secondary party. This is the opposite of a load fund, which charges a commission upon the initial purchase at the time of sale.

Since there is no cost for you to enter a no-load fund, all of your money is working for you. If you purchase $10,000 worth of a no-load mutual fund, all $10,000 will be invested into the fund. On the other hand, if you buy a load fund that charges a commission of 5% upon purchase, the amount actually invested in the fund is $9,500. If both funds return 10%, the no-load fund would have grown to $11,000 while the loaded fund would rize to $10,450.

Whether you prefer dealing with a broker selling load funds or an independent investment advisor recommending no loads, you need to clearly understand one truth: You can make money or lose money with either type of mutual fund.

The good thing is that with information availalbe online you can make a good decision when chosing a mutual fund. You do not need a sales person to do that for you. The major idea behind a load fund is that you will make up what you paid in commissions with the solid returns that the managers will provide. However, most studies show that loads do not outperform no-loads.

In fact, loads would usually do slightly worse, since commissions are paid directly from the fund’s return. So if in doubt, choose no-load mutual fund.

People tend to choose investing in mutual funds as their first investment preference because it is a relatively safe approach and there is no need for the beginner investor to decide their own portfolio.

Mutual funds are a way of diversifying the risk of your investment, as they are a collection of stocks and/or bonds invested in different securities. They are a way of investing your money in an efficient and secure manner.

How a mutual fund works is the money you invest is pooled with other investors and a fund manager will select, purchase and sell the stocks. That is why you can start investing into mutual fund with very little money. As a matter of fact, if you are very low on money, mutual funds are for you. You can invest as little as $50 into some mutual funds.

Other great reasons to get a mutual fund include the fact you can convert shares into cash at any time (certificates are issued to you by the fund manager) and often the minimum investment rates are low in price making it ideal for the beginner investor.

You should be aware that the low risk is dependant on the mutual fund and fund manager in question. You need to make sure by reading and evaluating the prospective available to future investors so you can see their performance over the last few years. Be particularly vigilant in finding out the charges for handling mutual funds and if you want to withdraw or transfer your investment somewhere else.

Your research should include extend to finding out about the companies that the mutual fund invests in. You could then do some research into the performance of these companies over the last few years to make sure your investment in that mutual fund is viable and sound.

It might be worth considering a no load mutual fund offered by state and municipal entities. This type of mutual fund has no charge to invest and is exempt from some taxes.

One last way to find out some profitable mutual funds and reputable fund managers is to get other peoples’ recommendations and look at such publications like the Wall Street Journal and Investor’s Daily.

There is one major drawback of mutual funds, however. You can expect to make an average of 10 percent per year. With that rate of return you will have to live very long to make serious money out of it. Plus you will never learn how to invest if you always let somone else manage your money.

I wrote more on Mutual Funds here.