Income Mutual Fund Myths for Seniors

Retirement income mutual funds are valuable investment tools for many seniors. Rather than aim for high rates of return, financial experts recommend investing in these funds to maintain the value of your savings by growing them at slightly above the rate of inflation. Income mutual funds are diversified over various companies and commodities, which makes them much less risky than other forms of market investing. Mutual funds are also more accessible than other retirement savings options, meaning anything you invest in your mutual funds can be easily sold and withdrawn without being subject to penalties. That said, many seniors have misconceptions about this investment option. Read on to unravel common myths about income mutual funds.

8 Active Myths | Suggest a Myth
MYTH: Mutual funds aren't profitable enough to be worthwhile for seniors.

It's true that other forms of investing tend to yield greater returns than mutual funds. However, mutual funds are ideal for retired seniors who mainly want to protect and maintain the value of their assets. For these purposes, income mutual funds are difficult to beat.

MYTH: Mutual funds that involve overseas markets are too risky.

Diversity is the reason why mutual funds are successful, and investments made in growing overseas markets only serve to further diversify mutual fund portfolios. Any kind of investment carries a degree of risk, but diversifying investments tends to result in less risk.

MYTH: Only the highest-rated funds are worth investing in.

The rankings for top-rated mutual funds are constantly changing depending on numerous market forces. When choosing an income mutual fund, your best bet is to do your homework and choose a fund that aligns with your investment philosophies and preferred investment firm.

MYTH: Seniors don't need to pay attention to their mutual funds.

Like with any kind of investment, seniors who have mutual funds should always keep an eye on their portfolios. Mutual fund brokers can always make adjustments when investors are unhappy with their fund performances.

MYTH: Many seniors can't afford to start mutual funds.

Too many people believe you need thousands of dollars just to get your foot in the door, and this isn't true. There are plenty of mutual fund offers for seniors who can't afford to make large initial deposits.

MYTH: Mutual funds are only worthwhile as long-term investments.

It's true that most people invest in mutual funds with long-term goals in mind. However, there are mutual fund opportunities for people who have shorter-term goals. You just need to contact several brokers and learn more about various funds.

MYTH: Savings accounts are better than mutual funds for protecting your money.

Savings accounts are risk-free up to the limit that they're insured by the federal government, so that does make them more safe than mutual funds. However, safer doesn't always mean better, especially when comparing savings accounts against relatively low-risk income mutual funds. While mutual funds might carry some risk, they also have much better rates of return, which means money invested in mutual funds is much more likely to hold its value over time.

MYTH: Seniors only need to look at bottom-line performance.

Obviously, performance is an important metric to consider when choosing a mutual fund, but seniors should also pay close attention to maintenance and broker fees associated with various accounts. A highly performing income mutual fund can be dampened somewhat by unusually high fees.