Today there are many types of mutual funds are available for us. When it comes to investing in mutual funds, investors have literally thousands of choices. So whenever you are investing money in mutual funds you have to know investment strategy and risks of the fund. So it better to take help of financial consultant help. Once you know what you’re saving for, when you’ll need the money, and how much risk you can tolerate, you can more easily narrow your choices. Generally we have three main mutual fund categories they are:
- Money Market Funds: Money market funds have comparatively low risks, compared to other mutual funds. Investor losses have been rare, but they are possible. Money market funds pay dividends that usually reflect short-term interest rates, and traditionally the returns for money market funds have been lower than for either bond or stock funds.
- Bond Funds: Bond funds usually have higher risks than money market funds, mainly because they normally follow strategies aimed at producing higher yields. Because there are many dissimilar types of bonds, bond funds can vary considerably in their risks and rewards.
- Stock Funds: Although a stock fund’s value can rise and fall quickly over the short term, traditionally stocks have performed better over the long term than other types of investments including corporate bonds and government bonds.
Making any sort of investment involved a certain amount of risk so it is always intelligent to look for the advice of a professional before making any decisions.
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