| Years ago trading was usually an activity carried | | | | offering of financial products like Mutual funds (to |
| out by wealthy individuals from families that had | | | | be discussed in a moment) and annuities that |
| likely been wealthy for generations. It wasn't | | | | make saving for the future easier and more |
| uncommon for the corporations of old to be | | | | accessible no matter what the financial position or |
| owned and controlled by the members of a single | | | | need is. |
| family. However, over time the markets began to | | | | Mutual Funds |
| accommodate institutions comprised of groups of | | | | A mutual fund is perhaps one of the most popular |
| investors. This type of trading also evolved to | | | | means of long term investing and is the vehicle of |
| involve different types of investment possibilities | | | | choice in IRAs and 401k accounts. A mutual fund |
| that served the interests of a variety of | | | | is basically a way of investing in a pool of |
| companies and people particularly for long-term | | | | different companies in order to minimize risk. A |
| savings goals. | | | | mutual fund investment can involve investing in |
| Pension Funds | | | | stocks, bonds and other securities. The appeal of |
| A pension is any payment made to a retired | | | | a mutual fund is the fact that a fund manager |
| person based on years of service. Most pension | | | | makes the decisions regarding what investments |
| payments are made in the form of annuity | | | | should be made. Usually with mutual funds, an |
| payments that pay a set amount each year. A | | | | investor can choose the level of risk they are |
| pension fund usually involves regular contributions | | | | willing to assume. Since the goal is long term |
| by the employer to an investment account. The | | | | investing, a degree of risk is acceptable since |
| risks of investment are taken by the plan sponsor | | | | overtime the collective value of the stocks in a |
| (the employer). The investment account requires | | | | fund will grow. |
| constant management to ensure the success of | | | | Mutual funds utilize a number of different |
| the fund. | | | | strategies in order to increase their value. The |
| Insurance | | | | primary advantage of a mutual fund is that of |
| It used to be that insurance companies were only | | | | diversification and professional management. |
| associated with planning for the future as far as | | | | Professional portfolio management isn't something |
| life insurance or health insurance to protect | | | | that a majority of investors have access to so it |
| against emergencies. Life and health insurance are | | | | serves as not only a safer investment but also |
| an absolute necessity when trying to ensure | | | | usually a more profitable one. It should of course |
| financial security. Disaster can strike at any time | | | | not be assumed that a mutual fund is a |
| making it not only an emotionally difficult time for | | | | completely safe investment since it still hinges on |
| family, but also financially if not prepared. | | | | the stock market that is prone to fluctuations, |
| Insurance companies over the years due to | | | | but since the goal is long term investing those |
| increasing medical costs have begun delving into | | | | fluctuations should not have a great impact on the |
| other areas of financial planning. Namely the | | | | overall future of the fund. |