Mutual Funds To Invest In

One of the more popular investments for those looking for financial security or retirement income are mutual funds. Mutual funds are something many individuals buy into so their combined buying power can be used to purchase a variety of securities they can then use to make distributions back to individual investors. This technique is beneficial because it allows smaller investors to reap the benefits from much more expensive assets they may have not otherwise had access to.

Continue reading to learn about the five types of mutual funds you can invest in.

Money Market Funds

If you are a retiree or someone seeking to have quick access to their funds, a money market account may be the perfect way to go. The goal of a money market account is to invest in many short-term securities that don’t require money to be locked up for long periods in order to receive the financial benefit. The benefit to this structure is everything is highly liquid, and thus you can add and subtract funds from it without making too much of a difference. The downside to this type of fund, however, is because of the short time periods of the securities, the returns are not as desirable as some longer-term investments. Luckily, these are extremely safe investments that allow retirees to rest easy every night knowing their hard-earned dollars are safe and in no danger of going away.

Fixed Income Funds

These types of funds typically are designed to produce some recurring income, which means it will make regular cash distributions retirees can then use to pay mortgages, car payments, and other bills. An income fund is typically made up of a variety of different kinds of bonds, which can include municipal, United States Treasury, or corporate bonds. Although bonds do not usually have the highest returns of all investments, they are again a very safe a reliable investment that can help smooth out some volatility of a more aggressive investment portfolio. Although bonds have lower returns historically, there is some diversity among different bonds. Typically, the longer a particular bond takes to mature, the higher the return on your investment. So, if you don't need to access the money for a few years, some longer-term bonds can be a safe investment with relatively good returns.

Continue reading to learn the details about a slightly riskier investment, but one offering higher returns.

Equity Funds

This type of fund usually sees higher returns but is slightly more risky and is subject to more market volatility. This is because this fund, sometimes known as a stock fund, is made up of a collection of individual stocks. While this fund is riskier than others on this list, it is far less risky than picking and choosing individual stocks to buy, because the majority of equity funds are well diversified among a variety of stocks in a variety of economic sectors. This way, if one sector is doing poorly on a particular trading day, other sectors that are doing better can help level this out and keep you from experiencing huge losses like you may if you invested exclusively in a small handful of stocks. These funds can also focus on a particular sector or industry if that is an avenue the investor would like to explore. Other ways these funds are created and categorized include market capitalization, risk tolerance, and geographic location.

Continue reading for a fund offering further diversification.

Funds Of Funds

This fund is exactly what it sounds like: a fund whose securities are made up of stakes in a variety of other financial funds such as the others on this list. The benefit to this type of fund is even further diversification in your investment. Not only do you get diversification of many stocks or bonds, but also diversification of the types of investments you hold. This is a simple way to roll all of these complicated subjects into one easy to understand security. The returns an investor would see from this type of fund are determined by the underlying assets that comprise it. Typically, those with more risk have the potential for higher returns but are also subject to more market volatility. If you want to be more hands-on with investing, you will not only have to research the fund itself, but also the funds in which it has invested in to comprise the security you are purchasing.

Continue reading to learn about balance in funds.

Balanced Funds

A fund considered balanced will have a healthy mix of both an equity or stock side, as well as a bond or recurring income side. The goal of this fund is to achieve balance by always having some part of the investment performing well. Typically, when markets are doing well, the equity side of things will be stronger than the bond side. Conversely, when markets are down or falling, the fixed income bond side of this fund may look like the better investment. Different mixes of stocks and bonds can exist to reflect the specific risk tolerance of the investor. Investors wanting to take on more risk for potentially higher returns can purchase a fund that skews more heavily to the equity side while a more conservative investor may skew more towards a bond-heavy fund. Some even more conservative funds like this include a money market aspect. The key is to understand what types of risk you are willing to take and analyze the underlying securities to see if they fall in line with your investment strategy.