Mutual funds are a popular way for Canadians to invest. Many people like the idea of pooling their money and having a professional fund manager invest it for them. About 50% of Canadians own mutual funds.
Why would I want to buy mutual funds?
- They give you a range of investments without the work and worry of choosing each one. You can choose a fund that buys the kinds of investments that you're comfortable with, and that will help you meet your goals.
- They can also help balance the safety of your money with the chance to earn more. It depends on the type of fund that you buy.
There are mutual funds for any kind of investor at any stage in life. As you move through different stages in your life, the kind of mutual funds you will want to have in your portfolio will likely change. Because there are so many funds to choose from, with different levels of potential risk and return, you can usually find one or more that fits your goals and your comfort with risk.
Mutual funds for the younger investor If you have many years to invest, you may feel comfortable having investments with greater risk and greater potential return. In that case, you would look into equity mutual funds. There are many kinds of equity funds. Some offer high risk, to very high risk, along with high to very high potential returns.
Mutual funds for investors at the middle stage of life At this stage of life, you may be trying to balance risk and return more moderately. You could consider balanced mutual funds that buy a mix of different kinds of investments.
Mutual funds for investors if you are in the later stages of life At this stage of life, you may be less comfortable with risk. Then you can consider money market funds and fixed income funds.
Remember: Before you buy, do your homework
Check out the fund, the risk, the likely return, and the fees. Keep your own goals in mind at all times, and select the mutual fund that?s the best fit for you at this stage in your life.
Content in this section is provided in partnership with the Investor Education Fund, a non-profit organization promoting financial literacy to Canadians. To find out more go to GetSmarterAboutMoney.ca.