Los Angeles Mutual Fund Investing
A mutual fund is a company that pools money from a group of investors and invests in different securities, such as stocks and bonds. The various securities that make up the mutual fund are known as “the portfolio,” and investors can buy shares in the overall portfolio.
The Advantages of Investing in a Mutual Fund
Mutual funds are popular among investors because they tend to be diversified, which lowers the risk of loss if one or more of the securities within the portfolio fail to perform as expected. Further, many mutual funds offer low minimum investments so that there is an affordable entry point for investors. Mutual funds also generally can be sold without any difficulty.
The Disadvantages of Investing in a Mutual Fund
Similar to any investment, all mutual funds carry varying levels of risk. Even if your fund is diversified to mitigate risk, you could lose some or all of your investment if the securities held in the fund drop in value. Market conditions can also play a factor, and just because a fund did well in the past does not guarantee its performance in the future. Furthermore, the more volatile the securities in mutual fund portfolio, the higher the investment risk is.
Call a Los Angeles Securities Fraud Attorney Today
Investing in mutual funds should always fit your risk tolerance. If you have been steered into investing in a mutual fund that does not fit your profile, or if your broker failed to disclose the risk of a particular mutual fund, you should contact a Los Angeles securities fraud attorney today for a consultation to discuss your legal rights.