JCK Show: Mutual funds and you

Jewelers who attended “Your Future and Mutual Funds” on Thursday morning received a financial education from Donna Phelan, an MBA and Graduate Gemologist who assists jewelers with wealth planning at Prudential Securities. Phelan explained various types of mutual funds so attendees would understand the differences and be able to select the appropriate ones for their businesses.

Mutual funds are companies in which investors pool their money to afford an investment, explained Phelan. Examples of investments included bonds, which are like IOUs; municipal bonds, which are issued by local communities; and corporation bonds, which are issued by large companies such as Microsoft.

“The best portfolios are diversified ones,” said Phelan. “Diversified portfolios have a healthy mix of cash, stocks, and bonds.” Phelan reinforced her statement with graphs of the 1973-74 recession and of the stock market crash of 1987 and explained how diversified portfolios fared compared with non-diversified ones. “All portfolios suffered losses, but clearly the diversified ones suffered a lot less,” Phelan said.

Phelan summarized her talk with a short checklist of questions jewelers should ask themselves prior to investing in mutual funds:

* What are my objectives?

* What is my time horizon?

* What is my risk tolerance?

* And how many assets do I have to invest?