Mutual Funds: What’s in Your Portfolio?

This week, Craig Siminski, of CMS Retirement Income Planning, shares with us an article providing an overview of different types of mutual funds in order of typical risk:

Mutual funds pool investment dollars from many individual investors to purchase a group of selected securities aimed at meeting a particular objective. This offers a convenient way to invest across a wide range of market activity that would be difficult for most investors to do by purchasing individual securities.

More than 52% of U.S. households owned mutual funds in 2022.

Here are some basic types of funds in order of typical risk, from lowest to highest. This is just an overview; with over 7,000 funds to choose from, you should be able to find appropriate investments to pursue your financial goals —

Money Market Funds

Money Market Funds invest in short-term debt such as commercial paper and certificates of deposit (which generally provide a fixed rate of return). They are typically used as a cash alternative and/or as a fund for settling brokerage transactions.

Municipal Bond Funds

Municipal bond funds generally offer income that is free of federal income tax and may be free of state income tax if the bonds in the fund were issued from your state. Although interest income from municipal bond funds may be tax exempt, any capital gains are subject to tax.

Income for some investors may be subject to state and local taxes and the federal alternative minimum tax.

Global Funds

Global funds invest in a combination of domestic and foreign securities. International funds invest primarily in foreign stock and bond markets, sometimes in specific regions or countries.

There are increased risks associated with international investing, including differences in financial reporting, currency exchange risk, economic and political risk unique to a specific…

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Craig Siminski is a CERTIFIED FINANCIAL PLANNER™ professional, with more than 25 years of experience. His goal is to provide families, business owners, and their employees with assistance in building their financial freedom.

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