Mutual fund FAQ

What is a mutual fund?

A mutual fund is an investment that pools your money with the money of many other people with similar investment goals. Professional money managers use the pool of money to buy securities that will help achieve the mutual fund’s specified objectives. Mutual funds may be an appropriate retirement investment because they offer professional management and diversification. Mutual funds are not FDIC insured and involve investment risks including possible loss of principal and fluctuation in value.

Why should I invest in mutual funds?

Mutual funds are a quick, efficient, cost-effective means of managing money. They provide professional management, ongoing supervision of your holdings and automatic diversification, all important elements of a well-rounded investment program. Because shares can be redeemed on any business day, mutual funds provide liquidity, and because shares of a mutual fund are priced daily, you always know what your investment is worth. Investment return and principal value will vary with market conditions and an investor’s shares, when redeemed, may be worth more or less than their original purchase price.

Should I always try to avoid mutual funds with the most risk?

No, it is possible to invest too conservatively which means you could run the risk of not earning enough to meet your financial goals. Investments that carry a very low risk and more stability tend to have a lower rate of return and you may lose purchasing power over time because of inflation.

Why should I have a diversified portfolio?

Diversification or spreading your assets among a variety of investments helps to control the risk of poor performance by a single investment. A diversified portfolio increases your chances for achieving long-term growth. Keep in mind, however, that diversification does not guarantee a profit or prevent losses to your portfolio.

A report on the funds operations and holdings covering six months, or half of the fiscal year. Because they follow a fiscal year schedule and not a calendar schedule, semiannual reports may be issued at any time of year.

You should consider the investment objectives, risks, charges, and expenses of a mutual fund carefully before investing. For a free prospectus, which contains this and other important information about each fund, call Ameriprise Financial at 800.297.7378. Read the prospectus carefully before you invest.

Investment products, including shares of mutual funds, are not federally or FDIC insured, are not deposits or obligations of, or guaranteed by, any financial institution and involve investment risks including possible loss of principal and fluctuation in value.

Brokerage, investment and financial advisory services are made available through Ameriprise Financial Services, Inc. Member FINRA and SIPC. Some products and services may not be available in all jurisdictions or to all clients.