Different Types Of Mutual Funds
By John Mussi, Thu Dec 8th

This is a guide to the different types of mutual funds. When itcomes to investing in mutual funds, investors have literallythousands of choices.

Before you invest in any given fund, decide whether theinvestment strategy and risks of the fund are a good fit foryou. The first step to successful investing is figuring out yourfinancial goals and risk tolerance - either on your own or withthe help of a financial professional. Once you know what you'resaving for, when you'll need the money, and how much risk youcan tolerate, you can more easily narrow your choices.

Most fall into one of three main categories - moneymarket funds, bond funds (also called "fixed income" funds), andstock funds (also called "equity" funds). Each type hasdifferent features and different risks and rewards. Generally,the higher the potential return, the higher the risk of loss.

Money Market Funds:

Money market funds have relatively low risks, compared to othermutual funds. Investor losses have been rare, but they arepossible. Money market funds pay dividends that generallyreflect short-term interest rates, and historically the returnsfor money market funds have been lower than for either bond orstock funds.

Bond Funds:

Bond funds generally have higher risks than money market funds,largely because they typically pursue strategies aimed atproducing higher yields. Because there are many different typesof bonds, bond funds can vary dramatically in their risks andrewards.

Stock Funds :

Although a stock fund's value can rise

and fall quickly (anddramatically) over the short term, historically stocks haveperformed better over the long term than other types ofinvestments - including corporate bonds and government bonds.

You can purchase shares in some by contacting thefund directly. Other mutual fund shares are sold mainly throughbrokers, banks, financial planners, or insurance agents. Allmutual funds will redeem (buy back) your shares on any businessday.

Making any sort of investment involved a certain amount of riskso it is always wise to seek the advice of a professional beforemaking any decisions.

You may freely reprint this article provided the author'sbiography remains intact:

About the author:John Mussi is the founder of Direct Online Loans who help UKhomeowners find the best available loans via the www.directonlineloans.co.uk website.