| Mutual funds are investments that bring money | | | | of bond mutual funds. These are U.S. |
| together into a common pool, in order for it to | | | | Government, municipal and corporate bonds. Just |
| bear a return, which is then shared among the | | | | like all other types of investments, they attract |
| investors. Bond mutual funds refer to debt | | | | different rates of return and the amount of risk |
| securities that one invests in, with the aim of | | | | involved also differs. The U.S. bond investments |
| protecting the initial principal paid while getting a | | | | are issued by the government or its agencies. |
| regular income from the investment. There is a | | | | The biggest advantage with them is that they are |
| dollar value of one share in the investment, which | | | | considered the safest since they are backed by |
| is basically the trading value of the investment. | | | | the credit of the government. The only risk |
| Mutual funds are popular with many investors for | | | | involved is the fluctuation of interest rates and |
| two main reasons, i.e. income earning and | | | | inflation. |
| opportunity for diversification. If you check well | | | | Municipal bonds are also invested in debt securities |
| around the stock market, you will realize that this | | | | and are issued by the state and local |
| type of investment fetches much higher returns | | | | governments to pay for the local public utilities |
| in form of dividends than most others. They are | | | | and facilities. These are projects like schools, |
| also considered to be low risk investments, but | | | | highways and bridges. Their advantage is that |
| not entirely risk-free. The risk is low due to the | | | | they are tax-exempt and are also backed by the |
| fact that the investment monies are spread out | | | | government. The risky bit is that, municipalities |
| among many stocks. | | | | tend to go bankrupt way too often, leaving these |
| In the United States, there are three basic types | | | | investments in a risky state. |