Mutual funds are a great way to save for retirement, as there are a wide variety of options available to potential investors. Depending on your risk-tolerance level, you can invest aggressively or conservatively. If you're not too close to retirement and would like to maximize your potential profit, take a look at crossover funds. An innovative blend of public and private equity investing, crossover funds are among the fastest growing investment types in the United States.
Understanding Crossover Funds
Learn about crossover funds. These types of funds are a combination of both public and private equity holdings.
Find out about public equity. Chances are, if you've heard about a stock, it's public equity. These shares come from public companies and are traded on the open market.
Discover private equity. Investments that are considered private equity are not traded on a public stock exchange. There is a wide range of private equity categories, including venture capital, mezzanine capital, leveraged buyout and angel investing.
Determine your risk level. In order to properly manage your crossover funds, you'll have to accept the high level of risk involved. Crossover funds usually have a higher risk, but yield higher returns.
Discuss your investment plans with your financial adviser. You'll need an experienced financial guru to help you invest in crossover funds and manage your portfolio.
Buy and Manage Crossover Funds
Make a short list of potential crossover funds. You can find information about crossover funds on major financial Web sites. Alternatively, you can also look in the finance section of your local newspaper for mutual fund information.
Choose your fund by carefully studying the prospectus, performance and management policies of each one.
Resist the urge to sell your shares if your fund has a poor year. Most funds experience ups and downs throughout the year, but rebound over the long term.
Consider selling if your fund has been seriously underperforming for 2 consecutive years. There's no shame in admitting you've selected a bad fund, but make sure you get out in time.
- Don't confuse crossover funds with crossover investors. The latter deals with investing in companies throughout their initial public offerings (IPOs) and has nothing to do with managing public and private equity funds.
- Keep in mind that all investments come with some level of risk. If you're not comfortable with the investments you've made, contact your financial adviser immediately.
By ehow.com
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