| A mutual fund guide could basically be called a | | | | Money market funds invest in safe short-term |
| guide to investing in stocks, bonds, and money | | | | debt like U.S. Treasury bills, with safety and |
| market securities. This is because about 99% of | | | | liquidity as the primary objectives. They pay |
| the time, if you own mutual funds your money | | | | competitive interest rates in the form of |
| will be invested in one or more of the above | | | | dividends, and the value of their shares is pegged |
| investments types. Funds are not just another | | | | at $1 and rarely fluctuates in value. Bond funds |
| investment option; they represent the best way | | | | invest in bonds, longer-term debt, to produce |
| for most people to invest in investment securities. | | | | higher interest income for the investors. The |
| When I was a financial planner a prospective client | | | | value of investor shares will fluctuate with |
| once asked me, "should I invest in stocks, bonds, | | | | changes in prevailing interest rates, so risk is |
| IRAs, or mutual funds?" That question told me a | | | | moderate in bond funds. |
| lot about the lawyer asking it. He needed a | | | | Equity funds invest your money in common |
| financial planner, and also needed access to a | | | | stocks with the objective of earning higher |
| good basic guide to investing as well. I explained | | | | returns or profits for investors. Risk is higher |
| that mutual funds were the easiest way for the | | | | here, as the price or value of shares can fluctuate |
| average investor to invest in stocks and bonds, | | | | significantly. The fourth category is balanced |
| and that this could be done in either an IRA and | | | | funds, which invest in a combination of money |
| or in various other types of accounts, like in a | | | | market securities, bonds, and stocks. The |
| joint account with his spouse. | | | | objective is to provide both moderate growth and |
| In this simple guide to investing we cover the four | | | | dividend income at a moderate level of risk. |
| basic types of mutual funds, their financial | | | | No guide to investing in mutual funds is complete |
| objectives, and the cost of investing. All of these | | | | without considering the cost of investing. You can |
| funds are simply professionally managed pools of | | | | invest through a middleman and pay as much as |
| investors' money. You invest a dollar amount, and | | | | 5% or more in sales charges called "loads" or you |
| in return own shares in a large portfolio of | | | | can invest directly in no-load funds and avoid |
| securities like stocks and bonds. The financial | | | | them. While all mutual funds charge for yearly |
| objectives range from safety and stability of | | | | expenses, you can pay 2% a year or more, or |
| principle, to high income, to high growth or profit | | | | less than ½% in well chosen no-load funds. |
| potential. | | | | |