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The Mutual Fund Guide That Shows Results

By Arna J. Bontemps

A mutual fund guide could basically be called a guide to investing in stocks, bonds, and money market securities.

What this means is that a mutual fund takes all of your money (and every one else’s) and invests in enough securities that anyone with less than $500,000 could never even imagine achieving. And since diversification is key to eliminating risk, saying that mutual funds are too risky is like saying air travel is dangerous. Risk is relative and in terms of reducing that risk, mutual funds achieve it better than any other investment.

Mutual Funds can also possess much more risk than you thought you were encountering. Here’s what I think you should consider doing. First unless you are a real expert, consider buying Index Funds, as opposed to investing in funds that carry a high load, or sales charge associated with them. If you pay a big commission, you simply have less dollars in the investment to work with. Studies show that for most mutual funds, the commission or load simply is not worth it. Don’t let a good or even a great salesman talk you into a load fund, unless you have checked for yourself, that the returns over several different periods of time have been outstanding.

Equity funds invest your money in common stocks with the objective of earning higher returns or profits for investors. Risk is higher here, as the price or value of shares can fluctuate significantly. The fourth category is balanced funds, which invest in a combination of money market securities, bonds, and stocks. The objective is to provide both moderate growth and dividend income at a moderate level of risk. No guide to investing in mutual funds is complete without considering the cost of investing. You can invest through a middleman and pay as much as 5% or more in sales charges called “loads” or you can invest directly in no-load funds and avoid them. While all mutual funds charge for yearly expenses, you can pay 2% a year or more, or less than % in well chosen no-load funds.

Mutual funds are basically a highly diversified, risk-spread investments that, while they charge expenses, are cheaper than virtually any other type of investment out there. Best of all, mutual funds can be virtually any asset class, not just equities, providing investors with plenty of options. This is because about 99% of the time, if you own mutual funds your money will be invested in one of the biggest and most established investment types.

People that buy and sell commodities say three things about them. They offer high risk and the chance for high return. And third, that commodity markets are easy to understand. I agree with the first statement. There is high risk in buying commodities direct. That is why we should leave them to the people who have the time and resources to do the needed research. The high risk outweighs the high return to me. And I feel commodity markets are difficult to understand, enough so that I do not go near them.

Visit the source at: http://www.prlog.org/10552286-how-to-become-financial-advisor.html

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Article Citation
MLA Style Citation:
Bontemps, Arna J. "The Mutual Fund Guide That Shows Results." The Mutual Fund Guide That Shows Results. 25 Jul. 2012. uberarticles.com. 2 Aug 2014 <http://uberarticles.com/finance/mutual-funds/the-mutual-fund-guide-that-shows-results/>.

APA Style Citation:
Bontemps, A (2012, July 25). The Mutual Fund Guide That Shows Results. Retrieved August 2, 2014, from http://uberarticles.com/finance/mutual-funds/the-mutual-fund-guide-that-shows-results/

Chicago Style Citation:
Bontemps, Arna J. "The Mutual Fund Guide That Shows Results" uberarticles.com. http://uberarticles.com/finance/mutual-funds/the-mutual-fund-guide-that-shows-results/


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