1. Find a good broker. Ask around. Ask your friends and see if their broker deals with American Funds. Most likely he or she does. American Funds is the 800 pound gorilla of mutual funds. (See my article on “how to find a good broker” if you need more help.)
2. Research the Growth Fund of America at Morningstar.com to make sure that you want to put money in it. The Growth Fund is what is called a “large cap” fund. In other words it invests in large capitalization companies. Big companies. IBM, GE, Boeing, etc. It is also the largest fund in the world and as such has gotten hammered recently (2008-2009). The ticker is AGTHX.
3. Once you’ve found a broker you are comfortable with ask him or her to buy the fund for you in your account. Make sure he explains the loads he or she is paid. Under $10,000 it’s 5%. As you invest more money the load becomes smaller.
4. Invest in what are called A or C shares. Generally don’t invest in B shares. Though the upfront cost is lower than A shares, it will cost you if you ever decide you want to get out of a fund all together. B shares have what are called “deferred sales charges” if you close out a position. You’ll have to pay to get out. I never used B shares when I was a broker. Saying this there are times when it’s probably OK to use them for positions under say $50,000.
5. Hang in there. AGTHX is a well managed fund. In my opinion, and of this writing, of course.