MUTUAL FUNDS With mutual funds investors own an undivided interest. Mutual fund shares can be purchased in full or fractional units. In Contrast Stock must be purchased in full units.
Advantages of Mutual Funds Voting RightsAn investor has most of the same voting rights provided those who have common stock. Automatic ReinvestmentMany funds offer automatic reinvestment of earnings. Reinstatement of InvestmentThis allows the investor to withdraw money from their account for emergencies and later redosit the money in the same account without paying a second sales charge. There are certain rules that apply to reinstatement, these include: #The fund prospectus must have a provision for reinstatment for this action to apply. #Reinstatement can be used only once during the life of the investment. #Reinvestment must be made within 30 days or is prohibited. #Investors cannot put more money into the fund than they took out. Simplified Tax liabilities to the investor is simplified. Each year a fund distributes to the investor Form 1099B which explains tax responsibilities Voting Rights
BOND FUNDS
Bonds funds can contain stocks and bonds and various other investment interest. The average maturity date of a bond fund is one of the most important factors to consider when shopping for a fund. Some funds have average maturity dates as low as one year. Others have average maturity dates as high has 9 years.