Whether setting up personal brokerage accounts or choosing among the investment options from your employer’s 401(k) menu, knowing the key purpose of each type of mutual fund or exchange-traded fund (ETF) is critical to matching the proper investment to your personal goals. Here are a few of the common types of mutual funds:
• Money market—key goal is conservation of cash.
• Fixed income—invests in a variety of bonds for conservation while providing some income.
• Equity—growth of assets through investment in stocks; can range from relatively conservative to highly aggressive, depending upon stocks chosen.
• Balanced (or mixed-asset)—blend of fixed income and equity; can be conservative to aggressive, depending upon mix.
• Index—goal is to track the performance of a specific investment index (e.g., S&P 500); conservative to aggressive, depending upon specific index chosen.
• Specialty—focuses on a specific investing sector, such as health, technology, real estate, commodities or even social responsibility (of the companies invested in).
• Target-date—changes its investments to more conservative as you near your target retirement date.
Your individual choices can lead to vastly different investing risks and potential outcomes. Our experts can help you make choices that work best with your current financial products and plans.
