It takes a lot of money to purchase enough variety of stocks and bonds to assemble a diversified portfolio. Therefore, one of the simplest and most efficient ways for a new investor to get started is with mutual funds. There are many types of funds, with varying investment styles

Index funds are good options for both first-time and seasoned investors. These funds aim to mirror overall market returns as measured by a specific index, such as the S&P 500^® Index or the Wilshire 5000 Index.

Actively managed funds have managers who invest with hopes of beating the benchmark. Performance varies greatly depending on the type of fund and its manager, so be sure to look for a fund with a strong track record before investing in it.

Stock (or equity) funds invest in U.S. or foreign stocks. There are a wide variety of stock funds, with a wide variety of risk levels associated with them.

Bond funds typically invest in corporate, muni or government bonds. They are further classified by whether they are taxable or non-taxable. These types of funds are usually conservative investments.

Money market funds generally invest in cash equivalents such as U.S. Treasury bills and CDs. They are lower-risk investments and tend to offer better returns than savings accounts, but they are not insured by the FDIC.

Blended or balanced funds invest in stocks and bonds with the goal of achieving both investment growth and stability.

Target-date or life-cycle funds are mutual funds that shift asset allocation as your target date for needing the money draws near. These are great options for young people who want a single investment and don’t want to have to rebalance their portfolios frequently.

 

Investors should consider carefully information contained in the prospectus, including investment objectives, risks, charges and expenses. You can request a prospectus by calling 800-435-4000. Please read the prospectus carefully before investing.

An investment in a money fund is neither insured nor guaranteed by the Federal Deposit Insurance Corporation (FDIC), or any other government agency. Although money funds seek to preserve the value of your investment at $1 per share, it is possible to lose money by investing in the fund.

Indexes are unmanaged, do not incur management fees, costs and expenses, and cannot be invested in directly.

Diversification strategies do not assure a profit and do not protect against losses in declining markets.

Bond funds are subject to increased loss of principal during periods of rising interest rates.

Charles Schwab & Co., Inc., member SIPC, receives remuneration from fund companies for recordkeeping, shareholder services and other administrative services for shares purchased through its Mutual Fund OneSource® service. Schwab also may receive remuneration from transaction-fee fund companies for certain administrative services.