2. LAP: QS-035 Objectives Discuss reasons individuals choose to invest in mutual funds. Explain how to buy/sell mutual funds. Mutual Funds

3. Objective Discuss reasons individuals choose to invest in mutual funds.

4. Alternative to investing in individual securities A collection of shareholders’ money, invested by professional fund managers in an assortment of different securities Can help you reach a variety of financial goals

5.  Determines the price of a mutual fund’s shares  (total portfolio value)  Calculated at the close of each business day (number of outstanding shares) – (liabilities)

6. Spreading out Spreading out Mutual funds often contain your investment dollars among a number of different securities 100 or more securities.

7. They analyze all the factors with potential impact on your money. Trained professionals make investment decisions for the fund.

8. Simple to trade Liquidity Simple to trade Liquidity

9. SEC regulations No bankruptcy SEC regulations No bankruptcy

10.  Management costs  Taxes

11.  Can issue as many shares as investor demand calls for  Can hold an unlimited number of shares  Can issue only a limited number of shares  Determined before the fund is ever established

12.  Growth funds  Value funds  Blend funds  Sector funds  International funds  Also classified by “cap size”

13.  Rate  Maturity  Credibility

14. Contain both stocks and bonds Relatively higher rates of return over the short term

15.  Unique type of stock mutual fund that copies the performance of a particular stock market index  Standard and Poor’s 500 (S&P 500)  Nasdaq 100  Passively managed— less expensive

16.  “Cousins” of mutual funds that trade like individual stocks  Prices depend on supply and demand rather than NAV.  “Spiders”  “Cubes”  “Cousins” of mutual funds that trade like individual stocks  Prices depend on supply and demand rather than NAV.  “Spiders”  “Cubes”

17. Objective Explain how to buy/sell mutual funds.

18. Where to Buy Reputable investment company Vanguard Fidelity T. Rowe Price

19. Banks Financial planners Insurance agencies All will charge you commissions, or Not to Buy Where “loads.”

20. Commissions Look for expense ratios of 1.5 percent or less. Managerial fees

21. Avoid “load” fees. Phone Mail Online

22.  Mutual funds that support your ideals and principles Anti-tobacco Anti-alcohol Anti-gambling Quick Case Pro-religion Environmentally friendly Examples

23. MarkED Acknowledgments Original Developers Lelia Ventling and Sarah Bartlett Borich, MarkED Version 1.0 Copyright  2007 MarkED Resource Center

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