Before you invest, it is important that you know what you are investing in. Any good stockbroker should be able to explain not only what you are investing in, but also the positives and potential negatives of any investment. In fact, brokers are obligated to provide you with a balanced presentation regarding recommended investments.
In a nutshell, a mutual fund is an investment vehicle that invests in and holds a basket of securities, such as stocks and bonds. Generally speaking, shareholders contribute the money used for investment, and the fund is professionally managed. The various securities that make up the mutual fund are known as “the portfolio,” and investors can buy or sell shares in the portfolio.
The Advantages of Investing in a Mutual Fund from a Los Angeles Securities Attorney
Mutual funds are popular among investors because of they typically offer a diversified portfolio of securities. One positive aspect of diversification is that if one of the stocks or bonds drops in value, the fund shares often maintain some price stability because the fund is comprised of many securities. Another advantage is that many mutual funds offer low minimum investments, making a mutual fund an attractive investment for someone looking to invest without large amounts of capital. In addition, mutual funds generally can be sold without much difficulty.
The Disadvantages of Investing in a Mutual Fund from a Los Angeles Securities Attorney
Investments carry risk. Even if your fund is diversified to mitigate risk, you could lose some or all of your money if the securities held in the fund drop in value. Market conditions also can play a factor. Importantly, just because a fund did well in the past does not guarantee its future performance. You also should be aware of the securities that comprise the fund: the more volatile they are, the greater the investment risk is.
Call a Los Angeles Securities Attorney Today
If you invested in a mutual fund and suffered significant losses or were not made aware of the risks of investing, you may have certain legal rights that require your immediate attention. Contact an experienced Los Angeles securities attorney today for a consultation to discuss your rights and options.