Investing with Mutual Funds Mutual funds are a great way to begin saving money for your financial goals. There are hundreds of mutual fund families to pick from and thousands upon thousands of funds. Here are some basics about mutual funds that you should consider if you plan to do some additional investing. A-shares, B-shares, & C-shares When you purchase an A-share, you will be charged an up-front sales charge for each deposit that you make. The average sales charge is around 5.75%. There are also annual expenses inside A-shares which are deducted every year. These expenses help pay the administrative fees inside the fund as well as the fund manager. In the event you need to take money from your A-shares account, you will not be charged at that time (no deferred sales charge). When you purchase a B-share, you are not charged an up-front sales charge. The result is you will receive dollar for dollar credit in your account. Much like A-shares, B-shares have annual expenses associated with them and these annual expenses tend to be higher than those within A-shares. And if you need to take money out of your account within the first seven years, you will be charged a contingent deferred sales charge. These charges decline over the first seven years that you own the fund. After the seventh year, B-shares convert to A-shares. C-shares work much like a B-share in that there are no up-front sales charges on contributions. C-shares also have operating expenses each year and these too are higher than that of A-shares and B-shares. Since C-shares do not revert to A-shares over time, the operating expenses will never decrease, which could be expensive in the long run. In addition, most C-shares have a contingent deferred sales charge for the first 12 months you own the fund. Asset Allocation: Fundamentals Risk is an inevitable part of investing. The good news is that risk can be managed. Asset allocation can help you reduce risk and enhance the potential of meeting your investment goals, although it does not guarantee a gain or eliminate the possibility of investment loss. What is asset allocation? Asset allocation is the process of combining stocks, bonds, and cash in an investment portfolio. Doing so creates a mixture of assets, each of which reacts differently to changes in the economy and financial markets. Stocks (also referred to as equities): Have historically offered the best opportunity for long term growth, but by assuming more risk and volatility, they have also produced a wider range of results. Bonds (also referred to as fixed income): Have historically earned returns within a much more narrow range, indicating that they are less risky than stocks, but still subject to interest rate risk and other risks. Their investment returns historically have also been generally lower than equities. Cash: Offers the least risk, but also the least opportunity to grow an investor's money. Combining all three types of assets in a portfolio manages risk by: Reducing exposure to a single asset class and its related risks. Giving the portfolio the potential to gain when each type of asset is in favor. What explains a portfolios performance over time? You many think that decisions about which individual assets to own and when to buy or sell them are the most important aspects of investing. However, according to two significant studies, the reality is that asset allocation policy has been responsible for determining more than 90% of a portfolio's performance variability over time. The choice of securities and timing of purchase and sales have a low impact on performance for long term portfolios. This makes the asset allocation decision one of the most important decisions you will make as an investor. It is important that you meet with an educated advisor and gain a basic understanding of mutual funds before you begin to invest. Securities offered through Cadaret, Grant & Co., Inc., member FINRA/SIPC The Hancock Group, Inc., Allan Hancock Agency, Inc., Hancock Associates, Inc., and Cadaret, Grant are separate entities.