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There is no risk to the money put into a CD that is issued by a government insured bank (FDIC). But you cannot take the money out without paying a penalty until the agreed upon time has passed.
A money market mutual fund is almost risk free, but it is not really guaranteed by anything except the good name of the fund. It allows you to take your money out whenever you want.
A mutual stock fund is subject to the usual risks of the stock market. You may make money or lose money.
In the long run, if you accept the modest returns of the safe CD's, you may miss out on the bigger returns of the Stock Market, especially in times of high inflation. Many experts advise you to split your investment dollars between safe, low return investments like CD's and riskier but high return stocks or mutual stock funds.
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What accounts are available to set up a future fund?
There are a variety of accounts to set up for one's future in terms of investment funds. Investment retirement accounts (or IRAs) are one of the most common and secure means for future fund investments. Mutual funds and CDs are also popular for long term investments.
Why is investing in a money market mutual fund a higher risk than investing in a certificate of deposit?
because unlike CDs, money market mutual funds ____________________are not insured by the FDIC (gradpoint)
Is fidelity 401K FDIC insured?
Per the FDIC website: http://www.fdic.gov/consumers/consumer/information/fdiciorn.htmlWhat Is Not Insured?Increasingly, institutions are also offering consumers a broad array of investment products that are not deposits, such as mutual funds, annuities, life insurance policies, stocks and bonds. Unlike the traditional checking or savings account, however, these non-deposit investment products are not insured by the FDIC. Mutual FundsInvestors sometimes favor mutual funds over other investments, perhaps because they hold promise of a higher rate of return than say, CDs. And with a mutual fund, such as a stock fund, your risk - the risk of a company going bankrupt, resulting in the loss of investors' funds - is more spread out because you own a piece of a lot of companies instead of a portion of a single enterprise. A mutual fund manager may invest the fund's money in either a variety of industries or several companies in the same industry. Or your funds may be invested in a money market mutual fund, which may invest in short-term CDs or securities such as Treasury bills and government or corporate bonds. Do not confuse a money market mutual fund with an FDIC-insured money market deposit account (described earlier), which earns interest in an amount determined by, and paid by, the financial institution where your funds are deposited. You can - and should - obtain definitive information about any mutual fund before investing in it by reading a prospectus, which is available at the bank or brokerage where you plan to do business. The key point to remember when you contemplate purchasing mutual funds, stocks, bonds or other investment products, whether at a bank or elsewhere, is: Funds so invested are NOT deposits, and therefore are NOT insured by the FDIC - or any other agency of the federal government.
How do municipal bonds compare to bank CDs as an investment?
Municipal bonds vs. CDs as a investment is municipal is free but Cds earn more a an investment overt time. The better choice would be to have a bank CD account.
What is the return on a roth IRA?
It depends on what you invest in. A Roth IRA is not a particular type of investment. You can use a Roth IRA to invest in bank accounts (CDs), stocks, bonds, mutual funds, and a lot of other more exotic investments. The rate of return you get depends on the investment you choose.
what are some investment strategies?
Investment strategies depend on liquid and how safe you want your investment to be at risk. A bank savings account is most liquid and very safe, as are money market accounts, and CDs. At risk investments would include bonds, stocks, mutual funds, and properties but they often can yield a much higher profit (yet there is a much greater risk and no profit is guaranteed).
Investment Advisor?
form_title=Investment Advisor form_header=Sometimes we need help from others when making decisions. Investment advisors can provide you with their professional financial recommendations. Have you ever worked with a financial advisor?*= () Yes () No Do you own stock options?*= () Yes () No Where is your money currently invested?*= _Please Explain[50]
What kinds of products does Scottrade offer?
"Scottrade is an online and mobile investment trading company. A large variety of products is offered to its customers. These products enable customers to choose strategies that best meet their goals. The selections include stocks, mutual funds, IRSs, ETFs, bonds, treasuries and CDs."
What is naked CDS - Credit Default Swap?
A naked CDS is the purchase of CDS's without an investment in the underlying asset. Essentially buying insurance without the asset. Usually linked with speculation in the creditworthiness of the company. Speculators trade the likelihood a company will default on its payments.
What does it mean that a fund may break the buck?
Answer When an individual or his investment advisor invest money in a money market fund, he expects dividends on regular basis and the investment to yield a certain return (as of June 2008, it is less than 3%). The management of a money market fund, to be able to accomplish this return and pay themselves management fees, has to reinvest this money also. They usually invest them in commercial papers, bank CDs, etc, and since these investments are not risk free, it is possible that they eventually can get back only part of the money they originally invested, thus braking the buck. In such situation the individual may be getting back, for example, 80% on every dollar invested. Answer If a money-market fund gives investors less than a dollar-for-dollar return on their investment, that occurrence is known as "breaking the buck." Basically it means that you are getting a yield less than zero.
Shopping for an IRA?
So if you have a 401(k) from an old job that you’ve left you may be thinking about rolling that account over into an IRA. You may have looked around at different IRA accounts here and there and been left wondering what the major difference is between the different accounts at the various institutions. If you find yourself in the situation of shopping for the best IRA, then read on. You may be interested to learn that, for the most part, an IRA at one institution is nearly identical to an IRA at another. All IRA accounts are regulated by the same sets of rules after all. Where you will find a difference is in the investment options available to you within the different accounts. An IRA through a mutual fund family, for example, will usually offer shares of their funds for your investment purposes within the account. You won’t be able to invest in their competitors funds, however, unless the account is through the fund family’s brokerage arm and the account allows it. IRAs at banks often are limited to investing in CDs or savings bonds only. You can sometimes invest in mutual funds in a bank IRA, if (and only if) you open an account at the bank’s brokerage arm and the account allows it. Insurance companies will sometimes offer IRAs in which you can invest in various mutual funds if the IRA is opened at the insurance company’s brokerage arm. Sensing a pattern here? Deregulation of the financial services industry has seen firms that used to look very different from one another starting to look very similar indeed. So what do you do if you want to invest with a specific mutual fund family in an IRA? Should you go to a bank brokerage account? Or an insurance firm’s brokerage account? Or a traditional brokerage house? Well in all honesty, you’re probably better off going directly to the mutual fund family and opening an account with them. If they are operating in your best interests the fees you are charged (those you see and those you don’t) will be less than the fees you’d pay if you went to the bank’s brokerage and invested in shares of the same mutual fund. The reason is that the bank has to charge you a fee in order to make money, and the mutual fund has to charge a fee too. If you invest directly with the fund family in an IRA, often you’ll come out ahead on the fees you’re charged.
How are CDs and bonds different?
Unlike bond interest (paid periodically), the interest from a CD usually compounds, which means interest is earned on prior interest earned also. An investment in CDs, up to $100,000, is insured by the federal government.
