Mutual Funds Give Investors Many Advantages

Radio Transcript, 2 minutes 15 seconds, for use during week of Nov. 19.

Description: Penny, Susan and Ira talk about mutual funds.

Announcer: Invest Wisely comes to you from Iowa State University Extension through a grant from the Investor Protection Trust, providing investor education on the web at: investorprotection.org.

Ira: Penny, Susan and I would like to ask you some questions about mutual funds.

Penny: Mutual funds are a great choice for many individual investors.

Susan: How do mutual funds work, Penny?

Penny: Mutual funds pool money from many investors.  So, a mutual fund company can provide diversification for individual investors and give you access to the skills of professional managers who select and monitor the securities in the fund.

Ira: Are there other advantages?

Penny: Another advantage is their liquidity.  In other words, you can easily convert your investment to cash.  They are easy to purchase and can require a smaller amount of money to get started.

Susan: So if I haven’t got a lot of money or a lot of time, mutual funds could be the way to go?

Penny: Yes, but remember just because mutual funds make investing easier, you’re still not off the hook.  As with other types of investing, you need to educate yourself about mutual funds and research individual funds before you make a commitment

Ira: What are some specific things to look for?

Penny: First, make sure you select a mutual fund which has investing objectives and a risk level that match your own.  Each mutual fund will have specific investment objectives such as growth, safety of principal, or current income.

Susan: One of my goals is to save for my retirement, which is still several years away.

Penny: You might look for an aggressive growth or growth mutual fund, depending on your risk tolerance.

Ira: Whereas, I’m already retired.

Penny: Because one of your goals is to protect your retirement income, you might look at a growth and income fund or a fixed income fund.

Susan: Thank you, Penny.  As always, you’ve been very helpful.

Penny: You’re welcome and remember for more information visit the ISU Extension website at extension.iastate.edu and look for ‘Invest Wisely.’