The best investment fund for you to invest money in is difficult to find when you don’t know what’s out there. Funds manage money for investors, and there are at least 4 different forms of or types to choose from. Before investing money in an investment fund you should know the landscape, because some are not appropriate for many investors.
HEDGE FUNDS are for wealthy people. If you are an average investor you don’t even legally qualify to invest money here.
CLOSED-END funds have been around for years and trade like stocks. Sometimes they trade at a discount to the actual value or net asset value (NAV) of the securities in their portfolio. Sometimes they trade at a premium. Investing money here is a bit tricky, and this form of investment fund is not real popular with every-day investors.
EXCHANGE TRADED FUNDS (ETFs) are commonly index funds that trade like stocks and are not actively managed. They have become extremely popular with active investors, at least in part because they offer instant liquidity like other stocks that trade on major exchanges.
If you buy and sell securities in a brokerage account ETFs offer you a broad array of investment options. You can invest money for the longer term or play the market, buying and selling at home on your computer.
OPEN-END funds are commonly called MUTUAL FUNDS, and this form of investment fund is designed for every-day people who want to invest money. Mutual funds have been popular for decades. They are still the investment of choice for investors who want to invest money in stocks, bonds and the money market with professionals making the investment decisions for them.
Mutual funds are not trading vehicles for speculators. They are designed for investors with a longer-term investment horizon. In other words, chances are that they are the form of investment fund best suited to you. Finding the best investment or fund to invest money in is a different matter.
For most people, investing money pretty much comes down to this: stocks, bonds, money market securities or alternative investments. The real beauty of mutual funds is that they come in many varieties. You pick the fund, and they manage the money.
The challenge is in finding mutual funds that fit your objectives and tolerance for risk. That’s why I’ve written over 50 articles on mutual funds alone over the past several months: to help you get up to speed on the best investment fund available to every-day investors.