Mutual funds are diversified pools of securities, consisting of stocks or bonds or money market instruments.
Mutual funds provide three important advantages:
- Diversification
When you buy shares in a mutual fund, you are actually investing in all of the entities that have stocks, bonds, etc. included in the fund’s portfolio. If one company’s stock has a poor performance, it may be offset by another stock’s good performance. Thus, the diversification of investments helps reduce your personal risk. It is also important to note that, without a mutual fund, it would be very expensive to invest in all of the companies represented, on your own. - Expert Management
When you purchase shares in a mutual fund, your dollars will be invested by a professional fund manager with sophisticated research capabilities. In addition to increasing your comfort level, this saves you the time it would take to evaluate various investment options, or to debate the consequences of buy-sell decisions. - Variety
You can choose a mutual fund that best corresponds with your personal investment objectives and your tolerance for risk. Generally, mutual funds are designed to provide: 1) aggressive growth; 2) capital growth; 3) capital growth and current income; or 4) current income. While mutual funds generally produce results that vary from year to year.
For as little as $25 a month, you can make monthly investments via electronic transfers from your bank account. Unlike individual stocks or bonds, Mutual Funds remain liquid as shares can be redeemed at market value at anytime.
Mutual funds provide an excellent investment vehicle for many types of savings and investment goals. However, it is important to consult a professional financial advisor who can help assure they are an appropriate form of investment for you, and that the ones(s) you select will meet your personal needs.
Diversification can not eliminate the risk of investment losses.
Mutual Funds are sold only by prospectus. Please consider the investment objectives, risks, charges, and expenses carefully before investing. The prospectus, which contains this information, can be obtained from your financial professional. Be sure to read the prospectus carefully before deciding whether to invest.
