They are further classified by whether they are taxable or nontaxable.

Bond fundsВ typically invest in corporate, municipal, or government bonds.

(Some stock funds are also index funds, while other are actively managed.)

There are many different stock funds, with a wide variety of investment areas of focus and risk levels. Stock (or equity) fundsВ invest in U.S.Performance and fees vary greatly depending on the type of fund and its manager, so you have to be sure to choose carefully. Actively managed fundsВ have managers who invest with hopes of beating a benchmark.In addition to providing diversification, index funds can be attractive because of their simplicity and relatively low fees. Each of these funds comprises a portfolio of stocks that attempts to mimic the performance of a specific index, such as the S&P 500В® Index or the Wilshire 5000 Index. Index fundsВ are good options for both first-time and seasoned investors.And each fund carries a different level of risk and return. There are many types of funds, with varying investment styles. Are tax-sensitive-Shareholders are not taxed on capital gains from sales inside the fund.Want niche exposure-Some ETFs focus on specific industries or commodities.Trade actively-Shareholders can sell short, buy on margin, and set stop or limit orders.Investing in ETFs might be a good choice if you: ETF shares typically have higher liquidity than mutual fund shares. With an ETF, you can buy or sell shares at any time during the trading day (like a stock) in some cases, a commission for each purchase or sale is charged. Many ETFs track an index, or a basket of assets such as an index fund, and are traded on a public stock exchange. Want to limit fees-Look for mutual funds that have low expenses, do not charge transaction fees, or sales commissions.Look for unique investing strategies-Mutual funds may follow unique investing strategies, such as actively managed target-date funds.Rather, they're automatically invested to track an index.) (Index funds, on the other hand, are not actively managed.

Seek active management-While many ETFs passively track an index, mutual fund managers of actively managed funds typically aim to beat a benchmark index through strategic stock selection.

Investing in mutual funds might be a good choice if you: With a mutual fund, your order to buy or sell shares is processed at the end of the day and, unless there is a sales load or transaction fee, there is no cost for the trade.

Just like you, a mutual fund can choose to buy stock in companies, invest in bonds or cash, or select a combination. Understanding mutual fundsДЄ mutual fund is a company that pools money from many investors and invests in a broad range of securities, depending on the goal of the fund. They're also professionally managed, so you don't have to spend time following the day-to-day happenings in the stock market. Mutual funds and ETFs provide automatic diversification, so you can be invested in several companies or industries without having to choose individual stocks. Rather than investing in an individual stock or bond, many investors choose to invest in mutual funds or exchange-traded funds (ETFs). Charles Schwab Financial Literacy Survey.Special Guidelines for Loss of a Spouse.Managing Your Finances as You Change Jobs.The Importance of Monitoring and Rebalancing.

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