what are the difference between the mutual funds, government funds and index funds? what is the best for these

Question

funds to put my money into? should i just buy some stocks or go to this funds to make money more???

Answer 1

Where you should invest your money depends on your risk tolerance and the time frame when you will need the money.

Funds should not be used if you intend to use the money (aka cash out) in 5 years or less. Savings accounts or CDs are safest.

Between 5 and 10 years, you would want a fund that doesn't fluctuate too much, maybe the government fund.

More than 10 years, then consider any of the above.

If you do not have an emergency fund (aka savings account for unexpected emergencies like losing your job, totalling your car, etc.), then start one and put enough away for 6 months before investing in funds.

Invest in stocks when you have done enough learning to answer your own question as to what companies to invest in.

Answer 2

A fund usually is referring to a mutual fund. Thus all of the above options are mutual funds.

Government funds are funds that purchase government bonds, which are guaranteed by the government. Meaning you will get your money back unless the government dissolves. Bonds are a good investment when the interest rates are low.

Index funds are based on 'indices' which usually include a variety of top blue-chip companies (well established) for their index. The Vanguard S&P 500 is a well known index fund that proved to be incredibly stable over the long term. The advantage to index funds is they let you get the benefits of stock increases, without the risk of losing all your money.

Also worth nothing about mutual funds. The lower the fees, the better. Statistically over 90% of the funds are outperformed by the S&P 500 index fund, which have the lowest fees. So you might as well pick a low fee fund. An extra 1% fee over the course of 30 years on an initial investment of $50,000 is a $67,392 difference!! Make sure you get a low, or lowest MER fund, especially if you're tracking an index. Vanguard is known for their low fees, but if you can find a lower one, then go for it.

Short answer/Summary:
Where you should put your money into depends on your investment term. I would put my money into government bonds or money market funds if I need the money in the next 5-10 years. I would put my money in an index fund if I can wait at least 20 years before I need the money, so I can cash out at a good time.

To reiterate:
5-10 years -- Government Mutual Fund
20+ years - Index Fund

The worse thing you can do is cash out an investment (particularly an index fund) at a bad time. The S&P 500 has a proven track record to always recover from any depression, over the history of the past 200 years.

Hope this helps,
Ken

Answer 3

Actually, mutual funds hold stocks, government funds and index funds. So, the answer is, which do you think will rise in value the most- stocks of companies, general groups of stocks- index funds, or government funds- generally interest rate related. Probably the best idea for an investor is to diversify. Buy some of each.

Answer 4

For pretty decent descriptions of the different types of funds available go to;
http://moneycentral.msn.com/beginnerguide.asp?page=introduction
They can tell you what the funds are,what is different about each, and give you the sites of investment companies when you're ready to invest.
It's not a sales site, it's a lot of info you should consider and understand....
Investing is almost essential to making your money grow, but you have to understand what you're doing.....how to look at the holdings of a fund for "potential" and "risk" , most funds spread their investments over different kinds of companies, but some specialize...in energy, in health care, in retail, stores, in real estate , some specialize in different countries around the world.. by picking and choosing, you can increase your returns...
Don't let the terms and choices scare you... you will get the hang of it... invest in your future.

Answer 5

i would stay away from mutual funds and anything government. stock would be the best out of your 3