| With fewer and fewer employers offering | | | | wish. This is not the case with mutual funds, |
| pensions and other retirement savings | | | | which are only required to calculate their |
| options, more and more American workers are | | | | NAV once every 24 hours. |
| turning to Mutual Funds to save for the | | | | |
| future. | | | | There are three main types of mutual fund |
| | | | categories - money market funds, bond or |
| What is a mutual fund? It is a company that | | | | fixed income funds, and stock (equity) funds. |
| pools money from many investors and invests | | | | Each offers its own risks and rewards. |
| it in a variety of options including stocks, | | | | |
| bonds, short-term money markets and other | | | | Money Markets |
| securities. The fund's portfolio (or listing | | | | |
| of its investment funds), shows how | | | | Relatively low-risk, money market funds are, |
| diversified its investments are. These funds | | | | by law, only allowed to invest in |
| are handled by a professional money manager | | | | high-quality short-term investments issued by |
| as one account. Individual investors have | | | | the U.S. government. Inflation can be a |
| little (if any) say as to the types of assets | | | | concern, however, since rising inflation |
| purchased for the fund's portfolio. | | | | rates can quickly erode money market |
| | | | investment returns. |
| Letting someone else handle all trades can be | | | | |
| difficult for many seasoned investors to | | | | Bond Funds |
| handle, but most uneducated investors love | | | | |
| the idea of giving a team of professionals | | | | Bond funds generally produce higher yields, |
| sole buying power. The advantage of being | | | | thus contain more risk. |
| involved in a large-scale mutual fund is the | | | | |
| ability to diversify their holdings - a safer | | | | Stock Funds |
| investment for all. | | | | |
| | | | The best option for long-term investing, |
| There are some disadvantages though to this | | | | stock funds are extremely volatile on short |
| type of account. They include: | | | | term basis with drastic ups and downs |
| | | | depending on market trends. |
| ·Cost. Investors are required to pay sales | | | | |
| charges, annual fees and other expenses on | | | | Mutual funds are a growing investment |
| mutual funds regardless of how well (or | | | | strategy for many small scale investors |
| poorly) the fund performs. | | | | saving for their retirement. The key is to |
| | | | find a fund that offers a diversified |
| ·Price Uncertainty. When you purchase an | | | | portfolio that offers a comfortable risk |
| individual stock you can check to see how | | | | level for your investment style. |
| well it's doing as many times a day as you | | | | |