Want To Build Your Own Mutual Fund?

   Recently a number of consumers have asked me how they can create their own mutual stock fund because they no longer trust companies that are alleged to have engaged in after-hours trading.

   It’s hard to determine which mutual funds will not come under federal and state scrutiny. However, we all know stocks can be very risky, and I recommend against building your own mutual fund unless you have a trusted financial advisor or a relatively sophisticated knowledge of the stock market. But if you believe you have the necessary research and information tools, then there is a way you can create your own mutual fund portfolio and pay relatively low commissions.

   Millions of Americans have a traditional brokerage account into which they deposit money that their broker uses to buy whole shares of stock. Fees are paid based on the number of shares bought and sold and on the price of those shares.

   However, many consumers do not have the ability to fund a stockbroker’s account in advance. Rather, they can afford to invest maybe $100 a week or $250 per month into stocks through payroll deduction or automatic checking-account transfer. They also may not be able to afford whole shares of a wide variety of stock but can afford partial shares. Consumers in this group may want to use a dollar-based online-broker site that invests the entire amount you are able to invest.

   The largest online-broker site is www.sharebuilder.com, which allows you to determine how much you want to invest and at what frequency. You decide what stocks to purchase with the money you have and the company will lump together all of the orders it has and purchase the stock during specified trading times. You can pay for the stocks through checking account or payroll deductions. Fees are based on the type of plan you chose, from $4 per investment to $20 per month if you plan to buy a number of different stocks. The company’s website explains how this is done and outlines the different types of plans available to you.

   Three other online brokerages operate relatively easy-to-use sites, including www.mystockfund.com, www.buyandhold.com, and www.foliofn.com. Some of the online brokers only offer a limited number of stocks in their portfolios, so I recommend you analyze each site carefully before investing. Good luck in putting together your mutual fund portfolio!