Mutual Funds

Part 2

By Art Vandelay

Mutual funds are a collection of stocks, bonds, and other securities that are collectively owned by a group of investors. Inherently diverse and overseen by a fund manager, mutual funds are generally safe investments with limited volatility and a high probability for earning. While they typically have a lower ceiling for growth than stock market investments, even the most aggressive mutual funds are fairly safe from heavy losses.

Investing for Dummies

When choosing a mutual fund, you are typically looking at an investment of low to moderate risk, but you can choose a style that fits you. Low risk mutual funds generally hold a greater stake in stable investments and similarly have a lower ceiling for reward. Higher risk or aggressive funds are typically stock-heavy and have the highest potential for growth. Funds with moderate risk lie somewhere in the middle in terms of investment distribution and growth potential.

Mutual Fund Analysis

Past performance is not a flawless predictor of future trends, but it is the easiest way for potential investors to analyze the favorability of an investment. Read any potential investment's prospectus before making a commitment to get a sense of its risk level, growth potential, and overall outlook.

Shares

The basic units of mutual funds are known as shares. The more shares you own, the greater your stake in the fund. The value of a share is based on the combined value of all securities held by the fund. Share values are typically calculated daily, though they can be updated more frequently depending on specific fund.

Dividend

A dividend is a fraction of a fund's profits that are distributed to shareholders. Dividends can be generated by growth or interest from individual investments within the fund and are periodically paid out to investors.

Money Market

Money market mutual funds are low risk investments with fairly low growth potential. They are best for lower income investors who cannot afford the risk involved with volatile investments. Unlike most other investments, money market funds are generally secure from external economic conditions.

New York Hedge Funds

Hedge funds are high risk investment portfolios with a very high potential for reward and a similarly high level of volatility. They are generally restricted and are neither advisable nor readily available to the average investor.

Market Timing System

The concept of market timing deals with projecting securities' performance through economic data analysis. This works under the assumption that the performance of inherently volatile investments can be effectively predicted. However, over the years, the most predictable aspect of the market has been its unpredictability.

Blue Chip Stocks

When a stock is labeled as "blue chip," it simply means that the stock has been a consistently strong performer. Blue chip stocks have positive outlooks and impressive earning potential combined with below average risk.

Unclaimed Funds

Unclaimed funds can consist of unspoken for mutual fund or stock shares, uncashed checks, or inactive bank accounts, among other sources. If you believe you may be entitled to some type of unclaimed property, there are agencies and divisions at the state and federal levels that specialize in reuniting people with their property.

Lost Money

Like unclaimed funds, lost money can be manifested by ignored bank accounts, forgotten savings bonds, unclaimed security deposits, and a plethora of other sources. For instance, the IRS has reported that there is over $1 billion in unclaimed tax refunds from 2004 alone.