Page 23 - Book4E

Mutual funds are classed according to their investment objectives. Within each classification there are many variations. Younger investors, with most of their earning power ahead of them, can usually tolerate more risk than investors who are close to retirement.
• Money-market Funds: Many people see these types of funds as an alternative to a traditional bank account. They are usually risk-free, short-term investments. The returns on deposit in these funds vary and are linked somewhat to the interest rate paid on U.S. Treasury bills. Money moves into and out of money-market funds quite rapidly.
• Aggressive Growth Funds: These funds aim for high returns. They do this by investing in promising but risky opportunities.
• Balanced or Growth-and-Income Funds: These funds are a balance between the two funds above. They are willing to
take some risk for higher returns but also consider the need
to conserve capital. They typically invest in stocks, bonds, and other financial opportunities.
• Sector Funds: These deposit all their investments in one particular sector of the community, such as the automobile industry, or in one country or region of the world. Included in these funds are many categories such as healthcare, technology, and utility funds.
• Fully Managed Funds: These funds allow the managing company to make changes to the portfolio as it sees fit according to the company’s evaluation of the current market.
• Index Funds: These funds don’t try to make their own analysis of market trends, but rather structure their portfolios to match one of the established major stock market indexes, such as the Standard & Poors Index of 500 leading stocks.
Mutual funds offer depositors several opportunities. Most funds allow depositors to buy shares at regular time periods, reinvest their dividends automatically, and take their capital gains distributions as more shares rather than as a cash payout. Some funds offer a contract
Mutual Savings Banks (MSBs) 13