| According to a report by the Mutual Fund Alliance, | | | | whole financial picture if these factors are not |
| nearly one third of the investors in the U.S. have | | | | taken into account. |
| some sort of mutual fund in their portfolio. | | | | There are two types of mutual fund i.e. stock |
| One of the reasons for this is the very flexibility | | | | funds and bond funds. Stock funds are used when |
| of this type of investment. Because they are | | | | you seek capitol growth over a long period and |
| open-ended funds, there is no limit to the number | | | | you're willing to accept share-price volatility. You |
| of shares that you can buy or sell. When you join | | | | need to have an investment window more than |
| a fund your investment is combined with the | | | | five years. Bond funds give a steadier income |
| investments of other investors, all of whom have | | | | instead of rapid growth, are easier to diversify |
| similar financial goals. Each fund is part of an | | | | and have only modest fluctuations in share price. |
| investment company or family of similar funds | | | | Don't confuse bond funds with bonds. Bond funds |
| and they are managed by a professional fund | | | | have no fixed yield or contractual obligations to |
| manager whose job it is to monitor the progress | | | | repay investors and, since the funds are |
| of the fund and make day to day decisions that | | | | continually traded the risk characteristics change |
| help the fund reach its objectives. | | | | also. |
| Diversification of your portfolio can make a huge | | | | There are 3 share classes of mutual funds: class |
| difference to the amount of risk taken. Though, it | | | | A which charges a front end sales charge, which |
| doesn't guarantee the safety of your money but | | | | is deducted from the investment, Class B which |
| it is highly recommended because it lowers risk. | | | | has a deferred sales charge and Class C which |
| Mutual funds are designed to add this feature and | | | | has no sales charge and all three still have |
| they can be moved around freely to allow you to | | | | administrative fees attached. |
| either increase or decrease the amount of | | | | Depending on how much you have to invest and |
| diversification that you have. You must keep in | | | | the amount of risk that your portfolio can stand, |
| mind however that investment values can and do | | | | Mutual funds can be exactly the investment |
| fluctuate and when added to your fund charges | | | | option that you are looking for. |
| and administrative fees this can change your | | | | |