The turnover rate may seem like just another number for you to look at and confuse you but it does have major significance. As a young investor, you may not be too concerned about taxes but your parents might be. This number helps you determine how much you will have to pay in taxes for that mutual fund. For example, if the mutual fund has a low turnover rate, you will probably pay less in taxes. If it has a high turnover rate, you will probably pay more in taxes. For your comparison, the average turnover rate is about 50%.

   Some types of mutual funds just naturally have low turnover rates. These include retirement funds, growth and income funds, and equity income funds. Likewise, some mutual funds have high turnover rates. These are usually mutual funds that are riskier and require more concentration such as technology funds.

   We hope this has cleared up a couple questions. We apologize if we lost you anywhere in there but if we didn't, you might be able to put this knowledge to use sometime, because the turnover rate is a very important number to consider.