Mutual Funds

Investing In Mutual Funds

Over the past decade, mutual funds, which are invested in everything from stocks and bonds to commodities and money market securities, have attracted millions of investors seeking both income and capital appreciation. According to a recent study, investments in mutual funds have tripled since 1990. Today, more than 88 percent of investors own shares in mutual funds. Nearly half of all investors own all their stocks through mutual fund shares and do not own any stocks in individual firms.

A mutual fund is simply a pool of money invested for you by an investment firm in a variety of instruments like stocks, bonds or government securities. Each mutual fund is different in its make-up and philosophy. As an investor, you should look for funds with objectives and risk levels that match yours. If you are interested in a diversified mutual fund covering a single class of investments, there are many broad-based funds that invest in a wide variety of stocks. If you prefer to stick with single industries, you might consider sector funds such as real estate investment trusts (REITs), technology, and telecommunication funds, among others. Mutual funds are also a good way to invest in foreign stocks. Some funds own hundreds of different securities, while others may own only a few dozen.

The two most common types of mutual funds are equity funds that invest primarily in common stocks and fixed-income funds or "bond funds" that typically invest in bonds or money market securities. Less common are "balanced funds" invested in both equity and debt.

Most mutual funds require a minimum initial investment, sometimes as low as $250. The Net Asset Value (NAV) of a mutual fund indicates its value or price per share. Like stocks, mutual funds are liquid, meaning they can be bought and redeemed easily.

Many mutual fund rates do not account for shareholder tax liability. Your actual return after-taxes might wind up much lower than the pre-tax one cited in the magazine or newspaper article rating the mutual funds. Remember, funds with high pre-tax returns do not necessarily offer the best after-tax returns. Not all funds create the same taxes for the investor. Smart investors look for the best total return.

A mutual fund that frequently trades its holdings pays more taxes than a fund that holds its investments long term. Unless you are invested in an Individual Retirement Account (IRA) or other tax-exempt account, you have to pay taxes whenever your fund sells a stock and profits. The more profitable the trades, the more taxes paid. Some fund managers count on attractive short-term returns to attract new investors. If your mutual fund investment is for your retirement, then tax liability may not be important for you now.


To find out more about mutual funds, please contact our Certified Financial Planner (CFP®): 
John V. Lyons, Infinex Investment Executive, 508-234-8112 Ext. 1009, or Email.

Important Information

This website is for informational purposes and nothing on this website constitutes an offer to purchase or sell securities.

For more information about a particular non-deposit investment product, ask for a prospectus. Please read it carefully prior to investing.

Investment and insurance products and services are offered through INFINEX INVESTMENTS, INC. Member FINRA/SIPC.  UniVest Financial Services is a trade name of UniBank. Infinex and UniBank are not affiliated. Products and services made available through Infinex are not insured by the FDIC or any other agency of the United States and are not deposits or obligations of nor guaranteed or insured by any bank or bank affiliate. These products are subject to investment risk, including the possible loss of value.

                                                          Offered Through