The Five Types of Mutual Funds
Mutual funds come in five flavors; within these five categories are many different types of funds, so you can find a mutual fund that is tailored to your individual needs. Below is a brief description of the different funds:
Municipal bond funds: Mutual funds that invest in local and state governments. The dividends of municipal bond funds are usually free from federal taxes.
Municipal bond funds: Mutual funds that invest in local and state governments. The dividends of municipal bond funds are usually free from federal taxes.
Hybrid funds: Mutual funds that invest in both stocks and bonds. Hybrid funds are structured to achieve predetermined objectives such as rapid growth, matching a market benchmark, or investing in one industry. To sum up, hybrid funds use combinations of securities to meet their investment objectives.
Bond funds: Mutual funds that usually invest in the debt instruments of corporations and governments. Investors in bond funds are primarily seeking income with some protection of principal. Frequently, the only way an average investor has access to an expensive bond is through a bond mutual fund. Usually, bond funds are conservative and target the payment of dividends. Investors can choose among several types of bond funds. Investment grade bond funds usually have less risk than funds with stocks, but they arent risk-free. These types of bond funds are usually good investment choices for short-, medium-, and long-term investors who desire low risk. Investment-grade bond funds focus on current income.
Money market funds: Mutual funds that invest in the short-term debts of corporations and the federal government. Money market funds often invest in Treasury bills, commercial paper, bankers acceptances, negotiable certificates of deposit (CDs), and short-term debts of U.S. government agencies such as Ginnie Mae (www.ginniemae.gov). Money market funds provide less return and less risk than other types of mutual funds and are good investments for short-term investors. The principal advantage of these funds is their safety. Also, if you ever need to get to your money fast, money market funds may be the type of fund for you.
As always, read the details of an investment before making a commitment. Each investment is different and the risks will be different as well. Beginning investors often make the mistake of not finding out all the details before proceeding; do not just look at the profit you could make from the investment. - 23208
Municipal bond funds: Mutual funds that invest in local and state governments. The dividends of municipal bond funds are usually free from federal taxes.
Municipal bond funds: Mutual funds that invest in local and state governments. The dividends of municipal bond funds are usually free from federal taxes.
Hybrid funds: Mutual funds that invest in both stocks and bonds. Hybrid funds are structured to achieve predetermined objectives such as rapid growth, matching a market benchmark, or investing in one industry. To sum up, hybrid funds use combinations of securities to meet their investment objectives.
Bond funds: Mutual funds that usually invest in the debt instruments of corporations and governments. Investors in bond funds are primarily seeking income with some protection of principal. Frequently, the only way an average investor has access to an expensive bond is through a bond mutual fund. Usually, bond funds are conservative and target the payment of dividends. Investors can choose among several types of bond funds. Investment grade bond funds usually have less risk than funds with stocks, but they arent risk-free. These types of bond funds are usually good investment choices for short-, medium-, and long-term investors who desire low risk. Investment-grade bond funds focus on current income.
Money market funds: Mutual funds that invest in the short-term debts of corporations and the federal government. Money market funds often invest in Treasury bills, commercial paper, bankers acceptances, negotiable certificates of deposit (CDs), and short-term debts of U.S. government agencies such as Ginnie Mae (www.ginniemae.gov). Money market funds provide less return and less risk than other types of mutual funds and are good investments for short-term investors. The principal advantage of these funds is their safety. Also, if you ever need to get to your money fast, money market funds may be the type of fund for you.
As always, read the details of an investment before making a commitment. Each investment is different and the risks will be different as well. Beginning investors often make the mistake of not finding out all the details before proceeding; do not just look at the profit you could make from the investment. - 23208
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posted by X - Men @ 5:38 AM
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