What Are Bond Mutual Funds?
Whats in a name? Well, with bond mutual funds
, the name clearly suggests that it invests in bonds no question about that. Therefore, if you are thinking of investing in bond mutual funds, then you have to protect your principal loan while paying your income.
This means that you incur more risk whenever you generate the returns but with the bond mutual funds, you get dividends from your interest payment.
Just like with the other mutual funds, bond mutual funds have net asset value or the NAV.
This is the dollar value of your share in the fund and the price that you pay whenever you receive an amount from the buying or selling of your shares in the fund.
Investors opt for bond mutual funds because this means more income for them and a way to diversify their portfolio. Bond mutual funds pay higher dividends compared to savings account and money market.
They are more frequent than the individual bonds as well. When talking risks, bond mutual funds have lower risks and can provide the investor with the stability that he wants and needs in his portfolio.
When the investor has good bond mutual funds, this means that he is stable in the stock market.
But as an investor who is planning to go into bond mutual funds, you should still keep in mind that there are risks involved in this kind of investment. However, this depends on how smart your investments weigh along the stock.
The investments you get from your bond mutual funds may easily be spread out. The key is to not put all your eggs in one basket. In that case, the risk of losing it all is lowered.
Think of bond mutual funds as liquid investments and they flow faster than individual bonds. Shares are sold and bought just like that. But the advantage of this is that these are exempted from taxes be it state or federal.
There are three kinds of bond mutual funds. These are the US government bond funds, municipal bond funds, and the corporate bond funds.
The returns of these bonds differ depending on the amount of the risks that are inherent in every fund.
If you are going to choose among the three, we suggest that you go for the US bond funds because the inflation rate depends on your debt securities and this is something that you have total control of.
by: Rick Lee
Intrust Advisors Using Index Fund Investing To Meet Retirement Savings Goals Things To Consider When Buying A Home In Atlanta Ensure Your Profitability By Learning Day Trading Basics Benefits Of Attending An Option Trading Seminar Making A Stock Option Trading Strategy Ways To Explain Options Trading? Brokers And Trading Accounts Demat Account For Share Trading What You Need To Know About Securities Lawyers Conceptualizing Options Trading Strategy Futures Trading, Probability And Scalping Tis The Season To Be Green More Info On Compounding Profits