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Do you know what a mutual fund is? Odds are, you’ve heard of one and odds are you probably even own one either through your 401k or your IRA. It’s important to understand mutual funds when forming your retirement investment plan. Wealth CAP is an online investment company that assists people with retirement strategies to help them achieve their financial goals when retiring. We use mutual funds as part of our dynamic bucketing portfolios (DBPs) along with other market investments, safe investments and alternative investments. Our goal is to maximize your rate of return while giving you the best amount of liquidity and safety you need. Contact us today to get started, or continue reading below to learn all about mutual funds.


Mutual funds are a professionally managed set of investments, typically made up of stocks, bonds, and other security instruments, that you own collectively with a pool of other investors. The collection is known as a portfolio and the investment professional who manages the portfolio is frequently known as the portfolio manager.


Most mutual funds are actively managed by the portfolio manager(s) who make all the decisions regarding what to buy and sell. Mutual funds are usually large and have a large team of researchers behind them that support the portfolio manager. Think of the portfolio manager as you would think of your personal financial advisor. He or she is responsible for maximizing your returns, which is generally gauged by how well the mutual does in relation to a popular index such as the Standard & Poor’s 500. Most mutual funds are in the public domain, meaning they publish their rates of return, which is how clients know if the mutual fund is performing well or not. Like all investments that involve securities, it’s best to look at a mutual fund’s longer-term performance, such as three- and five-year returns, rather than a one-year return.


The price of mutual funds (also called its net asset value (NAV)) is calculated the same. The total value of the securities in the portfolio is divided by the number of the fund’s outstanding shares. The share is what the investor owns, not a piece of the actual mutual fund itself. Like all market instruments, this price changes daily since the price of shares changes daily. It’s important to remember nothing is a gain or a loss until you decide to sell.


  • Diversification. By definition, a mutual fund is a collection of security instruments, which means that you are investing in dozens or even hundreds of different companies. This spreads out the risk considerably because when one security is doing poorly, odds are another security is performing well. They not only balance each other out, but you don’t have all of your money in either one or the other as well.
  • Cost effective. The point of entry for most mutual funds is considerably low. Oftentimes, you don’t need a lot of seed money to get started, with some mutual funds being as low as $100 to join. This is dirt cheap considering the diversification you will be receiving. Furthermore, most mutual funds will offer discounts if you enroll in an automatic contribution program through your bank. And if you have a 401k or a Roth IRA, odds are some part of that money is being invested in at least one mutual fund.
  • Professional investment. Having a team of portfolio managers and researchers all working diligently to maximize your return on investment would be too expensive for the average investor. A mutual fund allows you to have an investment professional research companies, analyze market information, and buy and sell investments with very little cost out of your pocketbook. When you consider that if you had to do all this yourself, there would be no way you could accomplish such a task, then mutual funds themselves are worth their weight in gold.
    Thoughtless (for the most part). Mutual fund investment allows you to outsource the daily decisions about which stocks to buy and sell that can be draining. You put your trust in the portfolio manager, and he or she does the rest. Mutual funds are easy ways to get quality investments with little hassle on your part.
  • Convenient. Because mutual funds are a collection of individual stocks and bonds, the barrier to entry is extremely low, meaning you can own a lot of shares in a variety of different investment instruments easily and for a low cost.
  • Liquid. All mutual funds allow you to buy or sell your shares every day when the markets close. This is useful for when you need access to your funds in a pinch.


Wealth CAP agrees with the benefits of mutual funds. They are great investment instruments that can play a big role in the diversification of your personal portfolio. With Wealth CAP, we work hard to determine what your goals are for investing and to develop a plan to meet those goals. We whole-heartedly believe our dynamic bucketing portfolios (DBPs) are the best on the market in terms of maximizing income and minimizing risk. We adjust your bucket as your investment and retirement needs change, using the right combination of safe investments, such as money markets, alternative investments, such as real estate and oil and gas, and market investments, such as mutual funds, for your retirement income planning. Contact us today to get started!


  • Tax implications. Assuming your mutual fund is not a part of a retirement account (mainly 401k or IRA, which operate under totally different tax laws), you most likely will have to pay taxes on the monies you earn through your mutual fund, which, by law, must be paid out in periodic distributions to all owners of the mutual fund. If you earn dividend income, if you have a capital gain from the sale of a security, or if you have a capital gain from the sale of one of the fund’s shares, you might have to pay taxes. A tax professional can advise you if so, based on your particular circumstances. However, if your mutual fund earns income from investments in municipal bonds, you may be exempt from federal, and in some cases, state taxes. That is because most municipal bonds go to public goodwill projects, such as schools and bridges, which the government wants you to invest in.
  • Fees. We discussed earlier how mutual funds are very cost effective. Yet, your portfolio manager and his or her team of researchers don’t work for free. Every mutual fund is different but some common fees include transaction fees for when stocks or bonds are bought and sold, redemption fees if you sell your shares in a short amount of holding time, and investment and advisory fees. Before you purchase a mutual fund, check the fees, which can play a factor in your decision to purchase.



Wealth CAP charges a flat monthly fee so you’ll know up-front what the cost of your investments with us will be. We don’t charge any transaction fees or subscription fees. We believe in educating our clients for their financial wellness. We offer online, on-demand financial education programming that can help you with long-term care planning and understanding your investments.


Wealth CAP’s dynamic bucketing portfolios (DBPs) differentiate us from the crowd of investment professionals, all professing to have your best interests at heart, and then charging you outrageous fees to get you there. We put the ball back in your court as we merely serve as advisors to your financial goals. Wealth CAP uses proprietary, innovative investment technology to automate investing, which simplifies your life and achieves your retirement income planning goals. Wealth CAP is your go-to for the best investment offerings to produce safe, liquid, and diversified investment strategies for the long-term and for retirement planning. Contact us today to get started!