Mutual Funds

Introduction and Background of Mutual Fund Industry
Over the past 75 years, there has been no better way to experience financial growth than to have been a long-term investor in the U.S. stock market. Even though they have experienced some dramatic downturns, stocks, which are ownership shares in public corporations, have outperformed all other types of investments including bonds, CDs and U.S. Government securities and they have stayed ahead of inflation. Like the stock market, successful investing is never a sure thing, since you can’t predict what the value of your investment or your rate of return will be at any point in time. Yet, despite this uncertainty, the stock market remains among the best choices for long-term investing.
Stocks or equity securities represent ownership shares in a company and the right to share in both its profits (stock dividends) and its growth (rising share price). For both of these reasons, stocks have become an “investment of choice,” particularly for millions of investors looking for capital appreciation. While the stock market is known for its ups and downs, and individual stocks can rise or plummet overnight, as a whole, stocks have delivered a larger return on investment over the long run than any other instrument.
Let’s suppose you’re just getting started as an investor and have $5,000 to invest and you have three important goals you want to achieve. First, you don’t want to lose your money in a risky venture so you want security. But you also want to make the most money you can, so you want the prospect for growth potential, too. Finally, since you don’t have the time or knowledge to actively manage your money, you want professional money management — occasionally diversifying your investments into promising new opportunities. That sounds like a very good plan, but where can you invest your money and have a chance to meet all three criteria?
Individual stocks may carry greater potential …

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