| If you are new to investing, you may have
| |
| | then you should consider a mutual fund
|
| heard of mutual funds but do not know
| |
| | that consists of low risk equities and
|
| exactly what they are or how to select
| |
| | conservative bond and money market
|
| the right one. A mutual fund is a
| |
| | instruments. If you want a mix of
|
| collective investment security, and there
| |
| | investments, then you should look for a
|
| are many different types. It may consist
| |
| | balanced fund. If you want explosive
|
| of a mix of several different types of
| |
| | capital appreciation, then you should
|
| investment vehicles, such as stocks,
| |
| | consider a high-risk common stock or
|
| bonds, or derivatives, or it may consist
| |
| | high-yielding bond fund.
|
| of nothing but stocks that are part of a
| |
| | They are different than stocks when it
|
| certain sector of the economy, or it
| |
| | comes to fees and expenses. As with
|
| could be just bonds.
| |
| | stocks, funds are subject to capital
|
| For example, there are mutual funds that
| |
| | gains taxes. But a fund is sometimes
|
| consist of nothing but technology stocks.
| |
| | subject to a front-end and/or back-end
|
| There are also funds that are comprised
| |
| | load. If there is a front-end load, that
|
| of stocks that have a similar market
| |
| | means that a percentage of the initial
|
| capitalization (such as mid-cap funds,
| |
| | investment is automatically deducted to
|
| large-cap funds, or small-cap funds). And
| |
| | pay for commissions to the fund. If there
|
| some might contain several different
| |
| | is a back-end load, the investor must pay
|
| types of securities (such as stocks,
| |
| | a fee when the security is sold.
|
| bonds, etc.) that all fall within the
| |
| | Also, there is a 12b-1 fee that is often
|
| same risk classification (high-risk,
| |
| | deducted to pay for advertising expenses
|
| medium-risk, low-risk).
| |
| | incurred for the marketing of the fund to
|
| Just like stocks, mutual funds have a
| |
| | the public. Sometimes there is no 12b-1
|
| price per share, also known as the Net
| |
| | fee, it depends. Investors might be
|
| Asset Value (NAV). The NAV is calculated
| |
| | unaware of the 12b-1 fee because it is
|
| by dividing the total value of the fund
| |
| | sometimes deducted from the share price,
|
| divided by the number of shares
| |
| | so in a way, it is an invisible fee.
|
| outstanding. As with stocks, the price
| |
| | I hope this introduction to mutual funds
|
| fluctuates on a daily basis and it can be
| |
| | will help you make some decisions
|
| sold just like any other security.
| |
| | regarding your investments. There are
|
| When deciding what fund to invest in, you
| |
| | literally thousands of different funds
|
| need to consider your investment goals.
| |
| | available, and brokerage houses often
|
| Are you looking for long-term capital
| |
| | have their own set of funds that they
|
| appreciation, or would you prefer to
| |
| | create for sale to their customers. Talk
|
| receive immediate income from your
| |
| | to your broker and see if he or she can
|
| investment? You also need to evaluate
| |
| | help you identify the best investment
|
| your risk tolerance. Are you willing to
| |
| | vehicle for you. Just make sure you
|
| take a chance on a speculative fund to
| |
| | review the fee structure of the mutual
|
| potentially receive a better return, or
| |
| | fund you are interested in before you
|
| is capital preservation a high priority?
| |
| | invest.
|
| If capital preservation is your goal,
| |
| |
|
