Let's suppose you're just getting started as an investor and have $10,000 to invest and you have three important objects you want to achieve.
1st, Want security, don't lose money in a risky venture, like that found in a certificate of deposit or other fixed income investment.
2nd, Want to make the most money you can, so you want the prospect for growth potential, too.
3th, Want professional money management -- occasionally diversifying your investments into promising new opportunities, since you don't have the time or knowledge to actively manage your money.
It sounds like to be a very good plan, but where can you invest your money and have a chance to meet all three criteria? The answer for more and more Americans is to invest in funds.
What Is Mutual Funds?
As an investment tool, mutual funds pool together money from numerous investors and invest this collective sum into a variety of stock, bonds and various other investments.
They are professionally managed on behalf of the shareholders, and each investor holds a pro rate share of the portfolio -- entitled to any profits when the securities are sold, but subject to any losses in value as well.
Types of Mutual Funds?
Most funds can fall into three major types - growth funds,income funds and balanced funds, by how aggressive or conservative they are and by investment objective. A mutual fund can also be a loaded fund or no-load fund, and so on.
Growth funds are more likely to invest in well-established companies stocks where the company itself and the industry in which it operates are thought to have good long-term growth potential.
Income funds are tend to invest in government or corporate securities, it offer its investors a regular income usually paid out in the form of monthly dividends. This is why this type of investment is called a fixed income fund.
Balance funds is funds that invests in a combination of both stocks and bonds
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