When buying into a fund of funds ...
NEW YORK — *Check the expense ratio for the prospective fund. Some are among the costliest in the industry.
*Find out what securities the fund holds. Some underlying funds may not jibe with your personal values.
*Consider alternatives. If you have less than $2,500 to invest, you could put it in several regular mutual funds in monthly payments of $50 or less.
*Be wary of FOFs that hold funds from other fund companies. They can be expensive. And you could equal their performance with a fund that buys only within its own family.
*Don't settle for the low returns of an FOF if you are a young investor. Experts generally recommend that young adults invest for long-term growth. On the other hand, older investors might find a conservative FOF just right.