There are many types of mutual funds available in the market. These types vary according to the particular investment vessel where the funds are placed. There are three varieties of mutual funds namely Equity Funds, Fixed-Income Funds, and Money Market Funds that are important to learn. These are the avenues where mutual fund investing strategies are based so as to maximize the utility of the mutual fund.
Equity Funds (Stocks)
This is considered the largest category in mutual fund investment when it comes to invested funds. The mutual fund is invested in stocks with the main objective of obtaining capital growth with income in a long-term basis.
Fixed-Income Funds (Bonds)
The purpose of this mutual fund is to provide steady income. The funds are generally invested in government and corporate debt and its value may appreciate over time. Investors of this type of mutual fund are usually conservative ones or retirees.
Money Market Funds
Investing your mutual funds on money market will make it as secured as it can be. The risks involved in borrowers not paying their debts is highly minimized with money market because the terms on repayment period are very short. This is considered as a very safe place to stash your money because aside from the short-term repayment periods, you won’t have to worry about you capital too. Typical earnings are about twice as that of a regular savings/checking accounts but a little less than with certificate of deposits or CD’s.
Aside from the type of mutual fund to invest with, pairing up with the best mutual fund companies is another way to raise the possibilities of obtaining optimum returns. There are many online discount brokerage firms that would certainly be effective in finding the best mutual fund for you. An advice from qualified personnel such as a broker or financial adviser will surely bring positive results with your investments.
But we are aware that brokers charge you with fees and commissions for the services that they offer. This can be avoided with no load mutual funds. With no load mutual funds, you will be free of any charges most specifically commissions. There will be no transaction cost because the shares are directly distributed by the investment company without the aid of brokers or middlemen.
Mutual funds are not all about investments. This can also be used for financial emergency purposes. If you have an account you can avail of mutual fund loans. Technically you cannot withdraw money directly from your mutual funds. What you can do is open a margin account. With the margin account you can now borrow money using your mutual fund account as collateral. But there is one thing that you need to consider before getting a loan from your mutual fund. Remember that the value of your mutual fund depends entirely on the current market situation. So taking out money from it while your portfolio is doing great would mean loss of what would have been financial gains. But if you don’t have any other source of emergency funds then feel free to do so but it would be best to consult your financial adviser first.