Mutual Funds That Fits All Needs
It doesn’t matter what kind of an investment plan you want, there is a mutual fund for anyone and everyone out there. However, it is important to know that with every mutual fund comes its own risks and benefits and rewards and understanding that every type has a different kind is very essential. In brief, we can say that if the returns are potentially high, the risk of loss is also potentially high. Review of this software will explain potential profits and losses. Even though the level of risks may vary, every fund definitely has some sort of risk, it might be high or low. Even if you make use of the ‘money market funds’ it is not possible to diversify the risks and it is a fact that every investor should understand. Every mutual fund has its own objective that if of predetermined investment type which caters the following:
- The strategies for investing
- Investing regions
- Fund’s assets
There are three types of mutual funds that we can say have the level that is very basic and they are as follows:
- Equity funds: Investment made on stocks
- Fixed-income funds: Investments made on bonds
- Balanced funds: Investments made on both stocks as well as bonds
Majority of mutual funds are permutations and combinations of the above mentioned three classes of assets and some of them are described below:
Money Market Funds
The money market is nothing but the place where financial instruments are traded whose maturity is a very short period and will give more liquidity. Typically the maturities range from overnight to within a year, which is used as a means to borrow and lend in short-term.
This type of fund is consisting of government Treasury bills which are risk-free and short-term debt monetary contracts. Since it the risk involved is less, this is a good place to keep all your cash. However, your principal amount is quite safe in this fund, it will not get you any considerable returns. Typically the returns got from this is slightly more than the returns you would get in normal checking and savings account and slightly less than you could earn on an average certificate of deposit. When there was a financial crisis in the year 2008, even the money market funds faced a loss even though it invests in extremely safe assets. It faced loss when the price of the money market funds dropped to less than its level which is fixed at $1 and ‘broke the buck’.