| There are a lot of us who have heard of mutual | | | | looking for a safe investment to protect your |
| funds but when asked really couldn't tell us what | | | | retirement savings, and in exchange you are willing |
| mutual funds are or how they work. So how do | | | | to accept a small but reliable rate of return. |
| mutual funds work you ask? | | | | On the other hand younger investors may be |
| Companies that issue new funds pool money | | | | more interested in a riskier fund that will make |
| together and buy a variety of investments | | | | them a significant amount of money over a |
| ranging from safe treasury bonds to risky stocks | | | | number of years. If this sounds like you then you |
| in emerging markets. Once these investments are | | | | may be interested in an emerging markets fund |
| in place these companies divide the pool of | | | | that features stocks for companies in emerging |
| investments in to shares and distribute them to | | | | countries. These up and coming countries can |
| investors depending on how much money the | | | | provide incredible rates of return, often doubling |
| investor invests with the company. As this pool of | | | | or tripling the money invested, but they take on a |
| investments grows, so does the profitability of | | | | lot of significant risk such as the possibility of |
| the investment for the investor. | | | | currency rates collapsing or political uprisings that |
| The investments are monitored by a professional | | | | most fund investors don't have to worry about. |
| investor known as a fund manager. Fund | | | | Ultimately typical investors will invest in funds that |
| managers typically have a great deal of investing | | | | are a mix of both of these classes. Fund |
| experience and they use this experience to buy | | | | managers may choose to balance out treasury |
| and sell investments according to what level of | | | | bonds with emerging market funds, with some |
| risk and what expectations of returns the | | | | blue chip stocks mixed in. There are a lot of |
| investors have. | | | | investments out there like this with the |
| Obviously investors would prefer a low level of | | | | percentages of each depending on what the |
| risk and a high return, but typically risk and return | | | | investors are looking for. |
| have an inverse relationship. The nice thing about | | | | Mutual funds are a great investment option |
| mutual funds is that they tend to diversify | | | | because investors can find exactly what they are |
| investors portfolios by spreading around the | | | | looking for and can diversify their portfolio, but |
| invested money across many different types of | | | | can do so investing smaller amounts of money |
| investment. | | | | more common to the typical investor. Remember |
| There are a lot of different types of mutual | | | | though, always read and understand all risks and |
| funds that you can invest in depending on what | | | | fees associated with any investment you buy, |
| your desired risk level is. If you are an investor | | | | and run them by your financial planner before |
| that is close to retirement you probably are | | | | investing your hard earned money. |