In this day and age, more and more people are starting to play smart with their money. A lot of people now know the importance of investments, and are quite knowledgeable on mutual funds. However, not everyone is knowledgeable about mutual fund ratings and how to use them.

Mutual fund ratings are basically the numeric scale used to measure funds and determine their history of performance. The mutual funds with the best performance will basically have the best ratings.

That's basically simple right? All you have to do is look at numbers and find out if a fund is good or not. Well, the rating may tell you if a fund is a good choice or is better than a similar fund - however, the ratings will not indicate the future performance or will indicate the amount of which the fund will grow.

How and Where To Find Mutual Fund Ratings
One thing that you need to know when it comes to mutual fund ratings is that there are a variety of information and a variety of ratings from different sources. Thus, if you want to take a comprehensive look at the performance of mutual funds - then you should find different sources and compare the ratings. Mutual funds are either rated from 0 to 100 or 1 to 5.

Where To Start Looking
Morningstar is basically the leader when it comes to rating mutual funds. Morningstar is basically called "the gold standard" by financial channels and magazines. A good thing about Morningstar is that you can view their ratings on their website for free. But, in order for you to get the full details of a certain mutual fund, you will need to become a member of the site, and this requires a fee in order to be a member.

Aside from Morningstar, Standard and Poors is another reliable source of mutual fund ratings. The funds are rated according to past performance and future potential. Lipper Research, on the other hand uses its own way of ranking mutual funds through risks and rewards. You can also visit websites like TheStreet, MSN and BusinessWeek.

How To Use Mutual Fund Ratings
If you have specific mutual funds in mind that you want to do research on, then you may want to find a a variety of ratings for each mutual fund first. Then, calculate the average rating from all the ratings for each mutual fund. You will eventually find the results and see the top performing or the best choice.

However, you may also want to focus on mid - ranged ratings. These funds aren't basically poor performing, there are also situations that may cause mutual funds to rate below 50. Some funds may be in a slump, or may have a new manager to run the show. Either way, its good to do some snooping and asking before eventually deciding to bail out on the mutual fund or continue to invest your money there.

Some Reminders
You should never rely solely on mutual fund ratings when it comes to making your decision as to whether you should make an investment or not. Remember that these ratings should only help in the decision making process - and is not the sole factor for measuring the effectiveness of mutual funds.