When willing to invest in mutual funds for Supplemental Retirement Income Planning, you have millions of alternatives. It is always important to analyze the plan, its limitations and the risks you will be running, and thus, it would be easier for you to narrow your alternatives. For this matter, it could be helpful to get in contact with a Retirement Income Planning financial professional.
Mutual funds are classified in three main categories that differ in
regards to their risks, features and rewards. They are money market
funds, bond funds, which also receive the name of "fixed income" and
finally, stock funds, which are also called "equity funds". Let's take a
deeper look at each one of them.
Money Market Funds can only invest in just some high-quality, short-term
investment that be issued by the U.S. government, U.S. corporations and
local governments. These funds attempt to keep the value of a share in a
fund, called the net asset value (NAV) at a stable $1.00 a share. The
returns for these funds have always been lower than the other two kinds
of funds. Because of this, money market funds investors have to be aware
about the "inflation risk". Although Bond Funds are a bit risky than
money market ones, most of the time, risks can be controlled with
greater certainty than stocks. In addition, due to the fact that there
are many types of Bund Funds, their risks and rewards vary greatly.
These risks may encompass credit risk, which refers to the possibility
that issuers whose bonds are owned by the fund do not pay their debts;
interest rate risk and prepayment risk, which is associated to the
chance that a bond be "retired" early. Finally, there are differences
between one stock fund and another. Fo
Thus, people who are planning to invest in a fund that combines growth
and income, which are definitely key factors, may find mutual funds an
interesting balanced alternative choice for Supplemental Retirement