First off I would like to say Yeah Buddy!! for the phenomenal show the Stock Market put on for us today! That is one up for the good guys! One more push up for an early retirement! Sorry I'm a little excited... Now lets move onto the main attraction Mutual Funds.
Today I’m going to cover a broad definition of what an Aggressive Growth, Growth, and Value Funds consist of. You will see a nice list of the 3 Funds below.
Aggressive Growth Fund: This type of fund takes on higher risk for greater reward. An Aggressive Growth Fund will consist of companies that have great potential for rapid growth. They may focus on small companies that have recently gone public, individual sectors, or hot trending stocks that just came out with a great new product or service. Other things that may occur are frequent trading for gains, using leverage, options trading, as well as shorting stock outright (betting a stock will go down). The reason behind this type of fund is solely for capital appreciation. This type of fund is not meant for the risk adverse, but if you want the potential to trounce the averages in the stock market and make some serious money and don’t mind the high volatility than this is your ticket for a great ride!
Growth Fund: Growth funds are similar to an Aggressive Growth Fund as it is geared towards capital appreciation. However, Growth Funds tend to back off the risk and volatility compared to the extreme Aggressive Growth Funds. The difference in risk and volatility lies in the way the money is invested with reduced leverage and less trading frequency, but still tend to invest aggressively in small and mid cap companies with great potential. These are great funds to build wealth and can be used by a majority of investors. This type of fund still holds a great deal of risk. In my opinion the reward definitely outweighs the risk.
Value Fund: Value Funds consist of companies that have been determined to be out of favor by the stock market and have reached prices of value. Value as in the price compared to the fundamentals of the underlying company. Many of the so called Value stocks pay dividends as income to investors. The companies that are selected in a Value Fund tend to be steady growers that have lost their way. They may have slowed down in growth, are cyclical to the economy, may be in the middle of a restructuring turnaround, or have been taken down to low price levels do to short term negative news. hint... (BP which pays a 7.9% Dividend) This type of fund is great for the conservative investor since the dividends help prop the stocks up during bad times and thrive when the market recovers with capital appreciation. This fund is welcome to all!
For Sunday we will cover the last bit of Mutual Funds. I will explain what to look for in a funds track record, the expense ratio, the volatility, and a few other odds and ends.
Also, if you have a topic that you want me to cover Please... let me know. I'll be happy to answer your investing questions.
Happy Memorial Day!
Thank You,
Clay-
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