Mutual Funds

Have you ever wanted to buy stocks or bonds, but decided against because of lack of knowledge or lack of funds? Those two reasons are why many investors have decided to invest in mutual fund offerings. A mutual fund pools the moneys needed from various investors and then it invests in securities such as stocks, bonds, money market instruments, and other assets as well. For a fee a professional fund manager or team of managers invest the money of the fund’s shareholders in various investment opportunities that align with the fund’s objectives.

Many investors find mutual funds to be the right choice for them. In many cases the mutual fund is used for Roth IRAs, and 401(K) as well as 403(b) retirement accounts.

People invest in mutual funds because they are based on the concept of opportunity cost. Put simple you have to take some risk to receive a larger return for your investment. Still, it needs to be stated that all fund investments can and do decrease in their value an even with mutual funds you need to understand your risk when you enter into one.

Mutual funds are not new they been around in Europe since the late 1700s. They became popular in the U S before the Great Depression (1929). After the Depression the government regulation helped to increase the number who turned to mutual funds. There are Index funds, aggressive growth funds, life-cycle funds, and even social responsibility funds, (the later are also referred to as green funds. These funds cater to the demands of their groups of investors. During the period after the Great Depression the cost to invest in mutual fund lessened and the drive to purchase them increased. In 1976 the Vanguard 500 Index Fund was introduced. Many believe this fund created by John Bogle was the driving force to make the funds available to the average Joe.

Despite all the bad press during the first part of the 21^st century, the mutual fund scandals, the crash of 2008, the covid-19 pandemic these mutual funds are still the choice for many investors.

 The reasoning behind these funds is simple. Take your money and invest a little in a lot of funds; the likelihood of being wrong every time is unlikely. They say even a broken clock is right twice a day. The professional managers are a reason some flock to these funds. They do try to convince the public that they can out preform the average individual at choosing investments. Some times it may be turn but it is also likely to be false. However, for the beginning investor these funds are ideal, because of the low cost of entry.

There are three classifications of these funds:

1. Closed-end funds These are funds that investment companies issue only when the fund is organized.  Thus, only a limited number of the share are available to the investors. Once the limited number of shares have been sold then the only way to purchase them is from another investor who is willing to part with theirs.
2. Eschange-Traded Funds These funds invest in stocks or other securities contained in a specific stock or security index and has shares that are traded on a securities exchange or in the over-the-counter market.
3. Open-end fund A mutual fund where shares are issued and redeemed by the investment company at the request of the investors.

To learn more about the different types of funds you may wish to visit the Website: https://imealliance.com.

To learn about the fees and mutual fund investing:  https://www.investor.gov/introduction-investing/investing-basics/glossary/mutual-fund-fees-and-expenses

For evaluating different funds: https://www.investopedia.com>investing>how-pick-best-mutual/fund/

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