Different Types of Mutual Funds
This is a guide to the different types of mutual funds. When it comes to investing in mutual funds, investors have literally thousands of choices.
Before you invest in any given fund, decide whether the investment strategy and risks of the fund are a good fit for you. The first step to successful investing is figuring out your financial goals and risk tolerance - either on your own or with the help of a financial professional. Once you know what you're saving for, when you'll need the money, and how much risk you can tolerate, you can more easily narrow your choices.
Most mutual funds fall into one of three main categories - money market funds, bond funds (also called "fixed income" funds), and stock funds (also called "equity" funds). Each type has different features and different risks and rewards. Generally, the higher the potential return, the higher the risk of loss.
Money Market Funds:
Money market funds have relatively low risks, compared to other mutual funds. Investor losses have been rare, but they are possible. Money market funds pay dividends that generally reflect short-term interest rates, and historically the returns for money market funds have been lower than for either bond or stock funds.
Bond Funds:
Bond funds generally have higher risks than money market funds, largely because they typically pursue strategies aimed at producing higher yields. Because there are many different types of bonds, bond funds can vary dramatically in their risks and rewards.
Stock Funds:
Although a stock fund's value can rise and fall quickly (and dramatically) over the short term, historically stocks have performed better over the long term than other types of investments - including corporate bonds and government bonds.
You can purchase shares in some mutual funds by contacting the fund directly. Other mutual fund shares are sold mainly through brokers, banks, financial planners, or insurance agents. All mutual funds will redeem (buy back) your shares on any business day.
Making any sort of investment involved a certain amount of risk so it is always wise to seek the advice of a professional before making any decisions.
You may freely reprint this article provided the author's biography remains intact:
John Mussi is the founder of Direct Online Loans who help UK homeowners find the best available loans via the http://www.directonlineloans.co.uk website.
More Resources
Unable to open RSS Feed $XMLfilename with error HTTP ERROR: 404, exitingMore Stocks & Mutual Funds Information:
Related Articles
The 1% Solution
You probably know the story of Sherlock Holmes and the 7% solution. He had a drug addiction.
Bollinger Bands Strategies
The Bollinger Band theory is designed to depict the volatility of a stock. It is quite simple, being composed of a simple moving average, and its upper and lower "bands" that are 2 standard deviations away.
Parachute Investing
Ever jumped out of an airplane? It's OK if you have on a parachute. Pretty dumb if you don't.
Maximizing a Stock Market Investment
Maximizing a stock market investmentThere are several factors an investor in the stock market should consider for a maximum return on an investment:1. All stock purchases should be commission-free.
This Market Is Different
All of the talking heads have been telling us that this market is different. You are going to have to be patient and soon (hopefully in your lifetime) the DOW and the Nasdaq will be back at their old highs.
Pension Plans
If you have a pension plan at work you will want to read this and if you don't you will still want to because it affects your retirement account.There are two kinds of formal retirement plans that are set in place by employers.
Financial Crime
Congress recently passed another new law that is supposed to outlaw financial crime. Corporate officers will be sent to jail for "cooking the books" as it is called.
Small-Cap Stocks: The Beginning of the Journey
When an individual investor wants to roll up his sleeves and do some research in the pursuit of the next big winner in the stock market, the place many start is in the small cap sector.As with the other capitulation sizes (capitalization is a stock's market value), no one can completely agree on a precise definition, but corporations under $2 billion are often considered small caps.
Trading Tips No 8: Picking the Best Stock Market Price
Carefully thinking through your goal as a trader is of prime importance, when picking the best stock market price. It is very difficult if not impossible to meet a goal that is ill defined.
Good News?
As the man said, "I've got some good news and I've got some bad news. What do you want to hear first?" It was replied, "Tell me the good news first".
Do You Know What is the Single MOST Critical Mistake in Trading the Stock Market??
Well maybe that's overstating it a little, but it's certainly one of the most important.It is?(drum roll please)? "the need to be right"!Now that probably wasn't what you were expecting.
Its Better
Question: How does it get better when it gets worse?Last week we had a jobs report from Washington that there were fewer jobs created than they had anticipated, but the stock market took that as good news and the DOW had a strong rally. WOW! The bad news somehow turned into good news because the unemployment rate dropped one tenth of one percent.
Keep Your Profits
It looks like we have now entered a new bull phase in the stock market and I have a question for you. Will you give back the profits that you make this time as you did in 2000? You sure don't want to, but you are not going to get any help from your broker.
Stock Trading Diversification
This is the continuing story of our two imaginary traders, Peter and Paul.Peter is a professional trader, Paul is not.
Choosing a Stock Broker
If you were to find that you had some severe illness that required surgery, would you attempt to perform that surgery upon yourself? What if your car broke down and needed a valve job? Would you get out the Craftsman tool set you got for Christmas three years ago and start tinkering under the hood even though you know absolutely nothing about engines? Of course you wouldn't do either of these things because there are times in life when we know we must seek the assistance of a professional. So why is it that so many people try to make their own investment decisions without consulting a professional stock broker?A stock broker is a trained financial professional who knows how to watch the trends of the stock market, is kept up to date on financial developments by her brokerage firm, and knows how to make wise and sound investment decisions.
Online Trading Strategy: Collecting Cash when Stocks Go UP - It PAYS to Know More than Others
When it comes to stock market trading it PAYS to have more knowledge than the rest of the pack. Pure gold can be harvested in each profitable trade that you accomplish.
Mutual Fund Honor Roll - Buy High, Sell Low by Chasing Performance
Buy high and sell low -- It's not a typo.Millions of investors guarantee their failure by selecting mutual funds and stocks based on quarterly or annual performance records.
Bargain Basement - Finding Stocks That Go Up
Have you been listening to the talking heads on CNBC-TV? Or those talk radio stock experts? Getting all those good recommendations on what to buy now. Now?Those guys keep telling me the market is oversold.
Trend Trading - Trading Stocks Using Technical Analysis and Swing Trading Strategies
Peter is a professional trader, Paul is not. Peter has a tested, proven, written trading plan that he follows each time he enters a trade, Paul does not.
The Cub; II
We keep hearing about this bear market and that the bottom is "in" or "very close" so we should be invested in these bargain basement prices to take advantage of the next bull so we won't lose out on the expected huge profits.This is not a big bear market - yet.