If the length of time is more than about a year, the investment is often referred to as a fixed-income investment . Examples are corporate and government bonds and mortgages. Equity securities Equity securities are investments that give the holder part ownership in a company. When a mutual fund buys equity securities, it is buying a piece of a business. The most familiar example is common shares traded on the stock market.
Equity securities can earn money in two ways.
If a company appears to be doing well in its business, more people may want to buy a piece of it and the price is likely to go up. On the other hand, if a company's business doesn't seem to be doing well, investors may decide to sell their piece of the company and the price is likely to go down. Some kinds of equity securities also pay you a portion of any profits the company may earn. These payments are called dividends . You could make many of the same investments that managers of mutual funds make.