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Answers to Some of Your Questions About Investing
Q: What are some benefits of mutual funds over other types of investments? A: When you buy the stock or bond of a company, your returns depend entirely on how well that company performs. But, when you buy shares in a mutual fund, you are investing in the performance of a number of companies at the same time. That can help protect you from the ups and downs of one single company. Mutual funds are professionally managed. Portfolio managers search for securities they believe have the best potential to fulfill the fund's objective. Individual investors rarely have the time or resources to research potential investments as thoroughly as mutual fund portfolio managers and their staffs. Many mutual fund companies have large research departments whose function is to investigate and analyze potential investments and to keep tabs on market trends. The third important benefit of mutual funds is liquidity. That means you can get your hands on your money in a relatively short time. Investments like Certificates of Deposit (CDs) tie up your money for a period of time, while money from a mutual fund is available when needed. You can generally redeem money from a mutual fund with a phone call or by simply writing a check. Some types of mutual funds may charge a fee at liquidation. Mutual funds are securities and are subject to fluctuation of principal value. An investor's shares may be worth more or less than their purchase price in the United States. A CD is FDIC insured. While an early withdrawal may cost the investor some of his/her return, the principal is guaranteed by the bank taking the deposit and the Federal government. A CD is a much safer investment. Q: Is the money I invest in a mutual fund insured? A: No. Unlike bank deposits which are FDIC protected in the United States, mutual fund investments are not insured and share values will fluctuate. An investor's shares may be worth more or less than their puchase price at the time of sale. A: While traditional market wisdom says, "Buy low, sell high," that's easier said than done. Because people tend to be optimistic in good times and pessimistic in bad times, many do just the opposite. The best time to invest depends more on your goals and financial situation than on market conditions. Q: What is dollar cost averaging? A: Dollar cost averaging means automatically investing the same amount of money on a regular basis (usually monthly or quarterly), regardless of whether the price of securities you're purchasing is high or low. It's a way to smooth out the market's ups and downs by averaging out your investment costs. Most people tend to invest when the market is up, because they feel optimistic about future prospects, but their dollars purchase fewer shares. When the market is down, their dollars buy more for the same money, in essence giving them a bargain price. Dollar cost averaging gives you a number of advantages by eliminating the need to decide when to invest, helping you avoid the temptation of "timing" the market, and encouraging discipline in your investment program. Dollar cost averaging does not assure a profit and does not protect against loss in declining markets. Dollar cost averaging involves continuous investment in securities regardless of fluctuating price levels of such securities. An investor should consider his or her financial ability to continue making purchases through periods of low-level prices. Q: How often should I review my investment portfolio? A: Assuming your portfolio is following a well-defined strategy that's appropriate for your personal situation, you should review it at a minimum of once a year. But if you are not yet following a specific investment strategy that's attuned to your goals, concerns, time frame, risk tolerance and financial situation, you should act immediately. A good way to start is with a Personal Investment Plan from Citibank, based on your personal profile. There's no cost for the plan and no obligation. To get started, or for more information, visit a Citibank branch or call: 801666 A: There's no significant difference in the products we offer, but we like to believe there's a big difference in the service. Our registered professional Investment Consultants have been specially trained to help you develop investment strategies designed to meet your personal goals. They can advise you on everything from funding your children's education, to planning for retirement, to adapting your portfolio to a bear market, and much more. Best of all, they can help you devise a Personal Investment Plan that's created specifically for your personal profile. Q: How do I get in touch with an Investment Consultant from Citibank ? A: Simply stop by any local Citibank branch or call us 24 hours a day, 7 days a week, 365 days a year on CitiPhone Banking at 801666
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