Mutual funds

Why Mutual Funds

Investments in Mutual Funds have grown rapidly. As the graph below indicates, Canadians are opting for mutual funds rather than regular bank accounts and for good reason. The money is safe and returns are much higher than what most deposit institutions pay on money in savings or checking accounts. Mind you, any fund manager can buy the wrong stock and markets do fluctuate but with a balanced and long term investment approach the money is safe and the chances of a reasonable return are good.

Given the popularity of mutual funds it is not surprising that they are readily available; in fact they can be bought through most financial institutions. This includes mutual fund companies, banks, trust companies, credit unions and life insurance companies. Many offer their own funds, which means that they have come up with the idea for the fund, market it, and take care of its administration. Some act only as Fund Distributors; the management of the investments and even the administration may be left to others. Regardless of the arrangement, securities regulations require that your money and all the other assets of a fund be held in a custodian bank or trust company separate from the assets of the fund manager and or distributor. The purpose of the regulation is to make sure that your money is safe.