When it comes to investing it is important to not put all your eggs into one basket. Doing so exposes you to the risk of massive losses if a single investment does poorly. Diversifying across different asset classes like stocks (representing the individual shares of companies) bonds, stocks or cash is a better strategy. This reduces investment returns volatility and may allow you to enjoy higher long-term growth.
There are a number of kinds of funds, such as mutual funds exchange-traded funds, unit trusts (also known as open-ended investment companies or OEICs). They pool money from numerous investors to purchase bonds, stocks and other assets and share in the profits or losses.
Each kind of fund has its own unique characteristics and risks. Money market funds, for instance, invest in short-term securities issued by the federal or state governments, or U.S. corporations and generally have low risk. Bond funds tend to have lower yields, but they have historically been less volatile than stocks and offer steady income. Growth funds seek out stocks that don't pay dividends but have the potential of increasing in value and generating higher than average financial gains. Index funds track a particular index of the stock market, such as the Standard and Poor's 500, sector funds focus on a specific industry segment.
If you decide to invest via an online broker, robo-advisor or other service, it's essential to know the different types of investments available and the conditions they apply to. Cost is a crucial factor, as charges and fees can reduce your investment's returns. The best brokers online and robo-advisors provide transparency about their charges and minimums, and provide educational tools to help you https://highmark-funds.com/ make informed choices.