| Mutual funds come with in various sub-categories, | | | | that they are backed by the treasury and |
| all of which are defined according to their unique | | | | therefore loss of ones investment is very unlikely. |
| characteristics. Among the many sub-categories | | | | Mortgage bonds are issued by government |
| are the bond funds, which are investment in | | | | agencies like Government National Mortgage |
| bonds and other related securities. Unlike other | | | | Association. They also have relatively low risk |
| types of investments, they normally pay out their | | | | because they are guaranteed by the mortgage |
| dividends and interest periodically, more often than | | | | agencies, which in this case are government |
| the rest of the investments under the mutual | | | | owned. |
| funds category. | | | | The third category is one of corporate bonds, |
| One major thing to note about them is that they | | | | which as the name suggests is offered by |
| pay significantly higher dividends than most other | | | | corporations. They are guaranteed by the issuing |
| types of investments like CDs and money | | | | company and the risk factor is a bit high. This is |
| market accounts. The bond funds come in many | | | | explained by the fact that an investor stands to |
| categories, which are characterized by the | | | | lose his money if the corporation goes bankrupt. |
| primary securities and assets that they invest in. | | | | The last category is that of the Municipal bond |
| There are four major categories and they differ | | | | funds, issued by local governments. Other types |
| from each other in one way or another. | | | | of classification are according to returns or term |
| One of the categories is the Government or the | | | | of maturity. Term of maturity refers to whether |
| treasury bonds which are considered to have the | | | | the investment is long, short or medium term. |
| lowest risk factor. This is for the simple reason | | | | |