Mutual funds are one of the best investments one can engage in. It’s relatively low risk compared to other kinds of investments and is usually cost-effective. It also offers a wide variety of choices to choose from. In the United States alone, over 10, 000 mutual funds are available for one to choose from.
A mutual fund is a pool of money from many investors who wanted to earn from their money without actually being physically involved in the business. The mutual fund is handled by a professional funds manager who will be responsible for making the money of the investors grow by engaging in selling and buying of stocks in the funds portfolio.
To acquaint you further about mutual funds, here are the three basic types of mutual funds. Information like the level of growth, risk and rate of returns are also discussed.
One of the easiest mutual fund investments that one can engage in is the money market funds. These are short-term investments similar to the Treasury Bills.get full report at http://news.investors.com/investing-mutual-funds/092415-772646-what-to-do-before-rate-hikes-start.htm
It is considered as the safest mutual fund investment with almost no risk involved. It’s perfect for those investors who don’t want any risky projects. The downside to this type of mutual fund is that although you’ll get the lowest risk possible, you’ll also get the minimal rate of investment returns. The way to balance this is to put a large amount of money into the money market fund. You’ll get a return rate which is double to the interest rate that you can get from a regular savings account.
Another type is income funds or dividends. It’s also called a fixed income funds because investors get a regular monthly income in the forms of dividends. This type of mutual fund investment is from an government or large corporation securities or debt managements. The usual investors engaged in this kind of fund are those people in their retirement years and are extremely conservative. Dividends have a higher rate of investment returns compared to money markets but also have a risk which is higher.
There’s also the balance funds investment. This type of mutual fund is involved in an investment of all types of stocks combined. The goal is to achieve a balanced and profitable investment. It offers the right mix income, low risk and capital appreciation. For balance funds, it should be 60% equity and 40% income.
The last is what’s usually heard and is common in business talks, equity funds. These are high-risk investment mutual funds. It’s a long-term type of investment wherein the goal is to increase the initial capital after a number of years. It’s highly risky but after several years, it can allow its investor to regularly draw an income from the fund each month.
Whatever type of mutual fund investment you may have decided on, it’s important to remember that all business have their degrees of risks. The thing to do is to have an outline of your investment objectives and goals. It’s also important to prepare oneself to experience various success as well as losses to whatever fund investments you have put your money on.For more details, read this tips.