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MUTUAL FUND FEATURES
As
the stock market makes a significant recovery, you begin to feel you should be
participating. If you have ever
thought of getting into the market, a mutual fund is probably a good place to
start. The great appeal of mutual
funds is that the investor shoulders none of the investment decisions,
timing decisions or execution steps required by individual stock investing. MANAGEMENT
A
mutual fund is a professionally managed diversified portfolio of stocks and
bonds or a combination of both. Mutual
fund portfolio managers are trained in finance and have years of experience
managing portfolios. Many
funds have in-house analysts and research staffs to review financial and
economic data and to select securities that represent the best values for
capital appreciation or income. DIVERSIFICATION
A
diversified portfolio of stocks or bonds helps reduce risk, but does not assure
against market loss.
Financial research has shown that over half of the time a stock’s price
moves in tandem with the overall market. That
movement represents market risk. Twenty
to thirty percent of the time a security’s price is determined by specific
information about a company and/or its industry’s outlook.
Luck is the final factor that can influence a stock’s price. Portfolio
managers have little control over market risk or the vagaries of the financial
markets. If the stock market is
moving higher, portfolios will generally register gains. Diversification,
however, will help protect investors against non-market risk.
Most well-diversified mutual funds with asset values of more than $200
million hold from 50 to several hundred different issues. As
a result, by holding a large number of issues and maintaining a portfolio that
tracks the broad market, a few poorly performing issues should not hurt the
overall performance of the fund. This
could be disastrous if you, as an investor purchasing individual shares of
stock, held just one or two securities personally, and they were the ones that
went down while the market rose. FAMILY SELECTION
The
majority of investment companies have a group of mutual funds with different
investment objectives from which to choose.
Over the past 20 years, the number of mutual funds to choose from has
increased dramatically. Generally,
investors have the option to switch out of their existing funds into other funds
within the same family of funds, as their financial needs or investment
conditions change. REDUCED EXPENSES
In addition, mutual funds represent a low cost way to invest in the financial markets. Management fees for running the portfolio can be .5% or less, depending on the total assets of the fund. Many funds can be purchased with no-load or sales charge. Mutual Funds are sold by a prospectus which contains complete information, including all charges and expenses. Read it carefully before investing any money. A prospectus can be obtained from your Financial Advisor. PERFORMANCE AND
RESULTS
Fund
performance can be tracked easily and historic information is readily available.
Investors shouldn’t expect to get rich quickly from mutual fund
investments. During
the last five years, we have encountered an unusual boom in stock and bond
prices. Long-term planning is the
key and, as with other investments, patience is a virtue.
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Send mail to webmaster@fimadvisors.com with questions or comments about this web site.Regulatory Disclosure InformationSecurities offered through Mutual Service Corporation. Mutual Service Corporation and LPL Financial are affiliated companies and are members of FINRA/SIPC. FINRA web site is www.FINRA.org. Investment Advisory Services offered through Financial & Investment Management Advisors, Inc., an SEC Registered Investment Advisory Firm. Financial & Investment Management Advisors, Inc. is not affiliated with Mutual Service Corporation or LPL Financial.Certified Financial Planner Board of Standards Inc. owns
the certification marks CFP®,
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