Risk varies widely depending on the objectives and policies of the fund. Funds are not federally insured but your money is generally safer in a mutual fund than in a few individual common stocks because a mutual fund invests in many different stocks and bonds and thus spreads the risk over many different investments. The return on a mutual fund depends on whether the fund makes good investments. However, the amount of money you can get for the fund depends on its value, and the value changes regularly depending on conditions in the stock and bond markets. Stocks A bond is a promise by a corporation to repay the face value of the bond, plus a fixed rate of interest, at a specific future date.
Stock represents part ownership of a company.
You make money on stocks either through the dividends you earn or by selling the stock at a price that is higher than the price for which you bought it. Over longer periods, the price of the stock may increase or decrease. Stocks and bonds can be purchased from brokerage houses and through some banks. The stocks and bonds of good companies can be quite safe over longer time periods. However, these investments are not guaranteed by the Federal Government or anyone else.