Chapter 15: Investing through Mutual Funds

1. Why invest in Mutual Funds ?

1.1. Curent Income

1.1.1. Ordinary income dividend distributions

1.1.2. Capital gains distributions

1.2. Capital Gains

1.2.1. When you sell your shares for a higher price than when purchased

2. Advantages

2.1. Open-end funds

2.2. Diversification to protect from Random risk

2.3. Affordability

2.4. Professional management

2.5. Liquidity

2.6. Low transaction costs

2.7. Uncomplicated investment choices

3. Unique services

3.1. Convenience

3.2. Check writing & electronic transfers

3.3. Automatic reinvestment

3.4. Exchange privilege

3.5. Automatic investment

3.6. Effortless establishment

3.7. Beneficiary designation

3.8. Multiple income withdrawal options

4. Introduction

4.1. Mutual Funds pool the invested funds of many investors and use them to invest in a diversified portfolio.

5. How a Mutual Funds works?

5.1. INVESTORS --- purchase shares in --> MUTUAL FUNDS --- purchase shares in--> A DIVERSIFIED PORTFOLIO OF SECURITIES

6. Mutual Funds Objectives

6.1. Income

6.1.1. Sector funds

6.1.2. Regional funds

6.1.3. Precious metals and gold funds

6.1.4. Global funds

6.1.5. International funds

6.1.6. Emerging markets funds

6.2. Growth

6.2.1. Aggressive growth funds

6.2.2. Growth funds

6.2.3. Growth and income funds

6.2.4. Value funds

6.2.5. Large-cap, midcap, small-cap, microcap funds

6.3. Growth & Income

6.3.1. Stable-value funds

6.3.2. Balanced funds

6.3.3. Asset allocation funds

6.3.4. Target-date retirement funds

6.3.5. Mutual fund funds