Mutual fund investing is a lot like Thai cooking. Everyone has heard of it, most know a little something about it, but very few actually know how to do it and do it well. To invest in mutual funds wisely, it is important to have a good grasp on what mutual funds are, how they work, and what the risks involved may be. The fact that mutual fund investments are often considered safer than stocks, options, and other investments often misleads people to think that their investment in mutual funds are risk free. This, as you will see, is not the case.
The Risks of Mutual Fund Investing
First of all, mutual fund investments are not insured by the FDIC or any other federal insurance program or government agency. Even in cases where mutual funds are purchased through a bank (some may even bear the name of the bank), it is possible to lose money when mutual fund investing. Also mutual fund investments come with costs and fees that can affect the amount of return you receive on a mutual fund investment. It is important to know the costs of mutual fund investing before buying the funds. The Securities and Exchange Commission offers an online mutual fund investment cost calculator at its website which allows potential mutual fund investors to investigate the costs associated with the mutual fund they are interested in.
What is a Mutual Fund Anyway?
A mutual fund is actually a company that operates by taking money from a group of investors (all those that buy the fund) and then invests it in stocks or bonds, short term money market instruments, securities, options, or some combination of these investments. If the investments pay off, the investors make money. Because most mutual funds are run by people with a certain amount of financial savvy and stock market experience, mutual fund investing is often considered rather safe, but the potential for loss is real and must be considered.
Mutual fund investing can be advantageous because there are a number of federal regulations in place that are designed to protect investors. The actual investments that the fund makes are watched closely by market analysts and financial managers whose job it is to make appropriate decisions regarding the mutual fund's investments. The downsides include costs, taxes, and fees which must be paid regardless of how the fund performs.
Investment Tips by Mika Hamilton ? Read more free investment tips, tutorials & reviews at http://www.global-investment-institute.com
executive chauffeured services Bradford .. Madison to Airport carAre you paying any attention to your retirement savings? Do... Read More
Day trading is all about making buy and sell decisions.... Read More
Economists know more about how the fragments of society work... Read More
Every day on CNBC-TV they show a 200-day moving average... Read More
Let's discuss commodities; with the latest Enron situation, it is... Read More
I mean it when I say that. While plastic silverware... Read More
With an insecure job market, overworked employees, insufficient retirement savings... Read More
How do you make money without picking tops and bottoms?I... Read More
04/28/2005NASDAQ dropped -12.5% year to date in 2005. S&P500 index... Read More
Look back over the years and try to remember how... Read More
We need a rabbit!This was a pretty horrible week for... Read More
Wall Street's watchword has always been diversification, but what does... Read More
Outlined below are some of the advantages and disadvantages of... Read More
Right now there doesn't seem to be any "gold fever".... Read More
Just about everything you have been told about Social Security... Read More
We've all heard of the stock market and probably have... Read More
People are constantly asking me why is the stock market... Read More
This is the continuing story of our two imaginary traders,... Read More
It has often been said that there is only two... Read More
The broker told me not to sell because the mutual... Read More
People are always asking me when should I sell my... Read More
The Shadow knows. Remember him? It seems a shadow has... Read More
Money management starts with protecting your capital, realizing profits and... Read More
Fundamental analysis.Fundamentals analysis says the best way to predict the... Read More
What a great statement!I just heard someone use it in... Read More
O'Hare Chicago prom limo ..How is it possible that trash Companies are posting less... Read More
Never lose money in the stock market again. Yeah, I... Read More
Analyzing growth stocks is an important focus for any investor.... Read More
Why? Because I am going to shatter your conventional wisdom... Read More
We all know the expression, "My country, right or wrong",... Read More
Options trading can increase the profits you make when trading... Read More
What! Me worry?Many of you remember the cover of MAD... Read More
Outlined below are some of the advantages and disadvantages of... Read More
Money: the most charged word in the planet. It means... Read More
If you've ever flipped on the television to CNN Financial... Read More
The stock market has been in an up trend for... Read More
One of the great "secrets" of successful people is discipline... Read More
It is wonderful to be alive in the information age.... Read More
When it comes to stock market trading it PAYS to... Read More
What the heck am I talking about?It is often said... Read More
There is so much involved in developing peak performance, that... Read More
I have been trading for several decades and was an... Read More
All stock trading and investing methods must deal with the... Read More
Everyone who follows the financial news has heard of mutual... Read More
There is a current movie entitled "Eternal Sunshine of the... Read More
The spring-loaded rat catcher is the ultimate low-tech device invented... Read More
As I have said many times before in this column... Read More
The stock market often closes a week in the middle... Read More
Ever notice how behavior in one area of life can... Read More
One of the big advertising kicks today from mutual funds... Read More
Stocks & Mutual Fund |