When investing in stocks, some of the most popular options include equity funds, mutual funds, fixed funds, exchange-traded funds and index funds. Knowing which option to choose can be confusing, especially for first-time investors. Different funds offer varying degrees of diversification and risk. Also, investors may have more control over some kinds of funds, as opposed to other investments which are handled by financial firms.Choosing between a high-risk or low-risk income fund investment can take a knowledge and good understanding of just how income funds operate. A working knowledge of investment will help to minimize your risk and maximize
your investment. Of course, even the safest investments can still hold substantial risks, so being well informed about your investments is a must.
Equity funds and mutual funds are regarded as being lower-risk opportunities, with investments spread across various companies, commodities, stocks and bonds. Fixed funds are made up of investments such as junk bonds, corporate bonds and government bonds. Fixed funds issue regular dividends and can be just as stable as mutual funds, although not all bond investments are as dependable. Index funds are investments on various stock indexes such as the Dow Jones Industrial Average; they rise and fall with the overall market. Exchange traded funds, or ETFs, are hybrid mutual and index funds with shares sold in groups and individually.