Investing and Retirement Part 4: Investment Funds

Over the previous posts we’ve examined types of investing that the investor will be doing alone, with the final post we will be examining a type that pools a single investor with many more people. These are called investment funds, and they pool the money of many investors according to a strategy set forth by the broker or firm.

The most common kind is a publicly offered mutual fund, which is when an investor pays into the mutual fund which will typically rise or fall with the index it is associated with. The nice thing about investment funds is that you can often diversify and allocate them according to the amount of risk you wish to take. A low risk mutual fund will be filled of slow but steady growing companies, or staples in the economy. A high risk mutual fund may be filled of small companies that could rise or fall entirely each day.

Each of these funds will come with some sort of fee or stipulation, such as you must keep your fund over $3,000, or each year the broker receives a percentage of the growth. While it may seem detrimental, they are professionals who do this daily and the growth percentage incentivizes them to do well.

All in all, only you may not know how or what percentage of your funds you wish to invest, in fact investing can be intimidating for those who do not know what they’re doing. That’s why we’re here to help, contact us at the Center for Financial, Legal & Tax, Inc.