Understanding the different types of Mutual Funds

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1. Aggressive Growth Mutual Fund – The riskiest of mutual funds that invests in small companies that have the ability to have strong growth.  These funds go up and down fast however over the long term they remain the highest returning funds.  These are good investments for young and high growth investors.

2. Growth Funds – Less risky than an aggressive growth fund but still risky.  These funds invest in medium to large companies and go up and down rather extremely however the return long term are high. These funds are good for any investor looking for long term growth if principle.

3. Balanced Fund – Invests in both stocks and bonds and is less riskier than a  growth or growth fund.  The returns are good but not spectacular and are appropriate for almost all investors.

4. Bond Fund – Invests only in bonds, there are three types of bond funds, corporate, municipal, and government.  Low risk investment but low returns to match, these are better for soon to be retirees since the pricipal is more protected and interest is paid.

5. International Fund – Very risky but a high potential for large gains.  This fund invests in foreign countries and many invest directly in just one area or country.  These fund have risk factors like currency fluctuations, political turmoil, and corruption of officials.  Be very careful when picking international mutual funds.

In conclusion, investing in mutual funds is not complicated once you understand the basics.  Knowing this information will allow you to make a good decision in your selection of a mutual fund.


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