Intro to Mutual Funds
A mutual fund is a company that brings together money from many investors and invests the money in stocks, bonds, or other securites.
The collection of investments the company owns is commonly known as its portfolio. Each investor owns shares of the company, which represent an interest in the company's portfolio and the income it may generate.
You can choose mutual funds to fit you. Each fund has stated investment objectives, which are the goals the fund wants to achieve on behalf of its investors. Each fund also has principal investment strategies for achieving those goals.
You can select from a wide range of mutual funds, and each fund has its own features, risks, potential rewards, fees, and expenses, all of which should be considered before investing. It's important to find funds that fit your overall investing strategy based on your particular financial goals, risk tolerance and personality.
How it works
Mutual funds are managed by investment professionals who are dedicated to evaluating economic and financial market trends. These professional portfolio managers research, select and monitor investments they think will help the funds meet their goals.
When you invest in mutual funds, you purchase shares along with many other investors. The value of each share is based on the fund's net asset value (NAV) - its total assets minus its total liabilities - divided by the number of shares outstanding. Mutual funds are generally required to calculate their net asset value once every business day, so the value of shares can fluctuate daily. The price an investor pays may also include fees charged at the time of purchase.
Mutual fund shares are sold and redeemed by the fund itself, or through a broker acting for the fund, so you don’t have to wait for a seller or buyer to be located. Shares can generally be purchased and redeemed on any business day when the markets are open. Keep in mind that share values can fluctuate and purchase or redemption fees may apply.
While every investment has advantages and disadvantages, mutual funds can offer some real benefits to investors. Benefits can vary by fund, but here are a few common ones:
Managed by professionals
Mutual funds provide the benefit of ongoing professional investment management. Portfolio managers decide what to buy and sell, and when. This can make mutual funds an attractive choice for those who lack the time or expertise to oversee their own portfolio of individual investments.
Automatic diversification can be another benefit. By pooling money with other investors to purchase many different securities, your total exposure to any one security is limited. The automatic diversification provided by mutual funds can play an important role in managing overall investment risk. However, it does not ensure a profit or guarantee against loss.
Many mutual funds have relatively low dollar requirements for initial investments, subsequent monthly investments, or both. Pooling money with others also provides greater buying power for each investor. Mutual funds typically expose investors to a greater variety of securities than most investors could afford to purchase on their own. In addition, mutual funds often have lower brokerage costs for their portfolio transactions than individual investors would pay because they buy and sell larger volumes of securities.
Are mutual funds for you?
Mutual funds are used by many investors to help accomplish their financial goals. They can be particularly useful for investors who want to participate in the markets but are just beginning or don't have a lot of money to invest. While investing in mutual funds can be riskier than putting your money in savings or money market accounts, they can also offer the potential for better growth. Generally, the higher the potential return, the higher the risk of loss.
We can help you evaluate your goals and build a portfolio of mutual funds that makes sense for you.
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Diversification, rebalancing, and asset allocation do not ensure a profit or protect against loss in a declining market.
Mutual fund investing involves risk; principal loss is possible.
A mutual fund's investment objectives, risks, charges, and expenses must be considered carefully before investing. The prospectus or summary prospectus contains this and other important information about the investment company and may be obtained by calling 1-866-551-0060. Read it carefully before investing.
Mutual funds are not deposits or obligations of, or guaranteed by COUNTRY Trust Bank® or its affiliates, nor insured by the FDIC, the U.S. government, or any governmental agency.
Registered broker/dealer offering securities products: COUNTRY® Capital Management Company, 1705 N Towanda Ave, PO Box 2222, Bloomington, IL 61702-2222, 1-866-551-0060. Member FINRA /SIPC