Your Top Mutual Funds

2007-03-08 10:33:40

( Financial )



Mutual funds are pools of money organized to buy sets of stocks or bonds, with the express purpose of making money. They are an easy way to participate in the stock or bond markets, and usually carry less risk.

Mutual funds carry less risk because most are dedicated to keeping a diversified portfolio. They are also managed by investment professionals. These professionals are empowered to buy stock and bonds on your behalf. If these investments yield good returns, then the value of the entire fund (and therefore the value of your investment) increases as well.

Most people who do not have the time or the inclination to the study the financial markets invest in mutual funds. It is one way to benefit from stocks and bonds without effort of studying them in detail. That being said, the performance of mutual funds varies widely during any given period of time. Mutual fund rankings change as the financial markets change, although the top mutual funds are more or less consistent in their performance.

Finding the top mutual funds is not as simple as it may seem. The top mutual funds for you will depend a lot on what investment strategy you would like to follow, as well as the level of risk that you can tolerate. Before buying shares of a fund, you should take some time to study its investment strategy.

There are three main categories of mutual funds. Equity funds invest heavily in stock, bond funds invest in corporate or government bonds, and money market funds make short-term investments to keep share value at par. If you are an aggressive investor, buying into an equity fund will probably be best for you. On the average, stocks provide a higher return, but they also carry more risk. If you are more conservative, bond funds and money market funds will suit you better.

Finding the top mutual funds in any category is not easy. While you can find the top performing mutual funds listed on any financial site, they are not necessarily the best ones for you. The best funds are those that invest in the same investment instruments that you would, at levels of risk which you can tolerate.


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