Types of mutual funds (2024)

FAQs

Types of mutual funds? ›

That's why you should spread your investments equally across four types of mutual funds: growth and income, growth, aggressive growth, and international.

That's why you should spread your investments equally across four types of mutual funds: growth and income, growth, aggressive growth, and international.

Ramsey recommends investing first in a tax-advantaged account like a 401(k) or 403(b) from your employer. The goal should be to allocate about 15% of your gross income toward good growth mutual funds that will help you save up enough to live your desired lifestyle in retirement.

There's an 80-20 rule for money Dave Ramsey teaches which says managing your finances is 80 percent behavior and 20 percent knowledge. This 80-20 rule also applies to constructing a healthy life. Personal wellness is 80 percent behavior and 20 percent knowledge.

So, why does Buffett only recommend index funds? Because it's the best possible choice, "on an expectancy basis," as he put it. In other words, buying an index fund has a higher expected return than buying any single individual stock or actively managed mutual fund.

What is the most common type of mutual fund? ›

Bond funds are the most common type of fixed-income mutual funds, where (as the name suggests) investors are paid a fixed amount back on their initial investment.

Most exchange-traded funds (ETFs) are designed to track the performance of a particular market index (such as the S&P 500 or the NASDAQ 100), industry or sector. They function much like mutual funds but are priced continually throughout the day, so they can be traded like stocks.

Overnight Funds and Liquid Funds are among the safest mutual fund categories. Overnight funds invest in securities that are maturing in 1-day.

Large and mid-cap equity mutual funds: This category of mutual funds provides sustainable growth with moderate risk. It invests in large-cap companies, well-established and ranked from 1-100th among the top listed companies.

I put my personal 401(k) and a lot of my mutual fund investing in four types of mutual funds: growth, growth and income, aggressive growth, and international.

The Four Fund Combo is built on four index funds (or exchange-traded funds) that include the most basic U.S. equity asset classes: large-cap blend stocks (the S&P 500 SPX, +0.27%, in other words), large-cap value stocks, small-cap blend stocks, and small-cap value stocks.

The 4% rule limits annual withdrawals from your retirement accounts to 4% of the total balance in your first year of retirement. That means if you retire with $1 million saved, you'd take out $40,000. According to the rule, this amount is safe enough that you won't risk running out of money during a 30-year retirement.

(What I call the Four Walls go first—food, utilities, shelter and transportation—and then other essentials come next.) After that, you prioritize everything else in the budget based on your income, your situation and your Baby Step. As things change in your life, you change up where your money's going!