Mutual Funds: Pool of Investments

2007-03-08 10:33:40

( Financial )



Perhaps the interest rates in local savings accounts are not really that competitive. And earning more dictates most people to invest their money in other income-generating ways. This gave room for the emergence of mutual funds and its continuous existence for almost 90 years now.

When someone invests in mutual funds, they will find out that there is not much of a difference as compared to putting your money in a savings account in a bank. The main difference lies on the rates of the interest and the risks involved. Local banks usually give a fixed interest rate but mutual funds base their rates on market conditions.

In a mutual fund, all of the money funded by the members is being merged as one, thus the descriptive name. These funds are then placed by the company in other investments such as the stocks bonds to earn more. Since there are a lot of investments in the market, the company assigns a portfolio manager whose main role is to search for the right investment wherein the funds would gain the most. Also, he gets to do adjustments on the funds so as to avoid loosing due to the fluctuating conditions of the market. Once a gain has been made, it will be distributed back to the members.

In choosing which mutual fund to invest, previous performances of the fund are not sufficient basis. We must know how it invests and where it places the money.

One of the companies that provide mutual funds is Janus Distributors, LLC. Janus mutual funds come in different types depending on where they are invested. For instance, Janus mutual has a type of fund wherein they are being invested in their own Janus stocks and bonds. Hence, the gains of these funds depend on how the company would fare. They also have a mutual fund whose target of investment would be companies that have a global reach. This may mean more income due to the scope of the market but definitely would go along with a high risk as well. Another type of mutual fund they have are money market mutual funds who are more conservative and aim for capital preservation. Meaning, the funds are being invested without compromising the original amount funded. It is not that risky but definitely it would mean less gain.

Typically, we would always go for high yield mutual funds. However, we have to take into consideration that the bigger the earning, the higher the risk possibly involved. Thus, it’s better to look out for the best performing mutual funds in the market and knowing how and where their funds are placed. It’s a gamble and an art at the same time. It is always about being at the right place at the right time. It’s best we get mutual fund quotes to back up our investigation and see which mutual fund is highly to achieve our goal.


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