This article is about Mutual Fund Investing. Investing your money in mutual funds is a wise step. It pools money from different investors and invests the money in various fields like stocks, bonds and short term money market investments. If you buy the shares of mutual fund then you will become its shareholder. You can also sell your shares back to the fund in case of any emergency. Price of shares changes daily and you can sell your shares any time. Two main benefits of investing in mutual funds are diversification and professional money management. It also offers choice, liquidity and convenience.
Money Market Funds: You can invest your money in money market funds and it is 100% safe. The rate of interest is twice as compared to banks. These funds are not FDIC insured but there is no risk in investing money in these funds. You can easily withdraw your money in case of emergency as it provides a high amount of liquidity. You will not lose a single penny from your principal amount if you invest your money in these funds.
Bond Funds: If you invest in these funds then your money will grow but it carries some risk so invest your money wisely in it. Price of bond funds fluctuates daily. Sometimes, you can also suffer some loss. Bond funds are common among retired people. Bond funds are of many types: municipal bond funds, corporate bond funds, mortgage backed securities funds and U.S. government bond funds.
Stock Bonds: If you want to grow your money then you can invest your money in these funds but these are riskier than bond funds. Sometimes there can be heavy downfall in the price of stock bonds and you can suffer a huge loss. According to strategy types, stock bonds are of three types: growth funds, value funds and blend funds. According to size, they are of three types: large cap, mid cap and small cap funds.
If you have no proper knowledge about mutual funds then you can take the advice of a professional before investing your money in mutual funds.