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Often, there are two camps of people when it comes to wrangling financial documents: Some keep everything — every ATM receipt, every bank statement — sometimes in a drawer or box with little to no organizing principle. Others throw away (hopefully after shredding) just about everything that arrives in the mail.

The best approach is likely somewhere in between. Read on to learn how to keep just what you need, organize it well, and dispose of financial documents properly when they no longer serve a purpose.

The Importance of Financial Statements

“Out of sight, out of mind” is a cliché for a reason. Once taxes are filed, paychecks are deposited, and the rent or mortgage is paid, we tend to forget about these transactions, dumping the receipts in a deep file cabinet or throwing them away altogether.

However, the consequences of financial documents and bank statements stick around long after they’ve been settled. For example, the IRS can come calling years after a person files taxes if the organization suspects that income was misreported. Or, in the event of loss or damage, having a record of purchase for big-ticket items like electronics or jewelry can make it easier to file a claim.

Keeping track of financial statements can help serve as protection or proof if a transaction is challenged or misreported. Without the statement, you might spend days trying to obtain duplicate records, when you could have just had them neatly filed in the first place.

Not everything needs to be saved forever, but some things should be safely filed away for a rainy day.

What to Keep and For How Long

Like items in a grocery store, each type of financial document has its own expiration date. Some will be relevant years after they’ve been filed; others can be tossed within months. Here’s the general rule of thumb of how long you should keep each statement:

Tax-Related Documents: 3–7 Years

The IRS can audit anyone up to three years after they file if the agency suspects that an error was made in “good faith,” aka an accident.

That also applies to the opposite situation: If a filer thinks the IRS made an error, the filer can submit an amended income tax return up to three years after the fact for a refund.

Additionally, the IRS has six years to follow up on returns if it thinks the filer underreported income substantially, meaning by 25% or more. However, the IRS can go back as far as seven years in some situations.

It’s not a bad idea to keep the tax return, in addition to supporting documents, for seven years to cover your bases. That could include evidence of:

•   Retirement plan contributions

•   Charitable contributions

•   Interest payments on a mortgage

•   Alimony or child support payments

•   Records of stock sales

•   Records of home sale

Paycheck Stubs, Certain Bills, Bank/Credit Card/Investment Statements: 1 Year

If you aren’t using direct deposit for payday, you’ll want to keep your physical paychecks for a year. Once you receive your W-2 and confirm that the amounts match, the stubs can go.

Bank and credit card statements should stick around for a year, just to be safe. Budgeters can use them to compare balances month over month. It also can be a helpful habit to check over bank and credit card statements each month. It’s a chance to catch and dispute fraudulent or incorrect charges. In addition, bills for services like medical treatment and auto repair should be kept for at least for a year for reference.

Investment statements that are distributed quarterly should be kept on hand until the annual statement is revealed and the numbers are lined up.

💡 Quick Tip: Whether your check comes the first Wednesday of the month or every other Friday, if you sign up for direct deposit, you know when the money will hit your account. This is especially helpful for scheduling the payment of regular bills. No more guessing when you’ll have sufficient funds.

Purchase receipts, ATM Slips, Most Bills: 1 Month

Unless a purchase has a warranty or is tax-related, you can generally toss the receipt once it shows up on your credit card or bank statement. This is also the case for utility bills — you only need to hold on to them long enough to verify the charges on your bank account and bank statements.

As for bank deposits/withdrawals, including mobile check deposits, you can get rid of these records as soon as the transactions show up in your bank account.

Three Ways to Store Sensitive Documents

It won’t matter what you save if you don’t know where to find records in the long run. Safely storing sensitive financial documents doesn’t really mean tucking them away and forgetting about them. Here are a few ways to store and organize financial records:

•   Use an old-school filing system. Finding an affordable, fire-safe file box to keep statements in is already a massive step up from the bottom of a junk drawer. Everyone will have their own approach to logical filing, but it could be done by year, type of record, or institution the record comes from.

Some might be tempted to go extra safe and take this paperwork to a safety deposit box at the bank. However, if the documentation is needed, it won’t do a person much good sitting miles away in a bank vault. Keeping it close and safe is probably preferable.

•   Scan and save online. Many smartphones come with the capability to scan documents, and there are other well-reviewed scanning apps on the market. Those who tend to lose paper might choose to scan everything and save it online. The only hitch is keeping up with the scanning, and saving all documents to the cloud instead of just on the phone.

•   Go paperless. Many institutions offer paper-free transactions, meaning customers don’t get statements in the mail. Online banks vs. traditional banks have made this a priority. Going paperless means you don’t have to organize and file your financial records, but it’s still a good idea to come with a folder system on your computer so you can access what you need when you need it.

Recommended: Are Online Bank Accounts Safe?

The Takeaway

As a general rule of thumb, you want to keep any document that verifies information on your tax return for seven years, to play it safe. You can generally toss any non-tax-related financial documents (like pay stubs and bank/credit card statements) after one year, and get rid of monthly bills, ATM slips, and receipts for most purchases after one month.

With online banking, you can typically find past statements by logging into your account. Most financial institutions make electronic statements accessible for at least five years, and these statements usually come in printable formats. You can check with your bank to see how long it will keep your online monthly statements.

Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with eligible direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.

SoFi Checking and Savings is offered through SoFi Bank, N.A. Member FDIC. The SoFi® Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.

Annual percentage yield (APY) is variable and subject to change at any time. Rates are current as of 12/23/25. There is no minimum balance requirement. Fees may reduce earnings. Additional rates and information can be found at https://www.sofi.com/legal/banking-rate-sheet

Eligible Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Eligible Direct Deposit”) via the Automated Clearing House (“ACH”) Network every 31 calendar days.

Although we do our best to recognize all Eligible Direct Deposits, a small number of employers, payroll providers, benefits providers, or government agencies do not designate payments as direct deposit. To ensure you're earning the APY for account holders with Eligible Direct Deposit, we encourage you to check your APY Details page the day after your Eligible Direct Deposit posts to your SoFi account. If your APY is not showing as the APY for account holders with Eligible Direct Deposit, contact us at 855-456-7634 with the details of your Eligible Direct Deposit. As long as SoFi Bank can validate those details, you will start earning the APY for account holders with Eligible Direct Deposit from the date you contact SoFi for the next 31 calendar days. You will also be eligible for the APY for account holders with Eligible Direct Deposit on future Eligible Direct Deposits, as long as SoFi Bank can validate them.

Deposits that are not from an employer, payroll, or benefits provider or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, Wise, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Eligible Direct Deposit activity. There is no minimum Eligible Direct Deposit amount required to qualify for the stated interest rate. SoFi Bank shall, in its sole discretion, assess each account holder's Eligible Direct Deposit activity to determine the applicability of rates and may request additional documentation for verification of eligibility.

See additional details at https://www.sofi.com/legal/banking-rate-sheet.
*Awards or rankings from NerdWallet are not indicative of future success or results. This award and its ratings are independently determined and awarded by their respective publications.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

We do not charge any account, service or maintenance fees for SoFi Checking and Savings. We do charge a transaction fee to process each outgoing wire transfer. SoFi does not charge a fee for incoming wire transfers, however the sending bank may charge a fee. Our fee policy is subject to change at any time. See the SoFi Bank Fee Sheet for details at sofi.com/legal/banking-fees/.

SOBNK-Q225-029

A money order is a secure way to send money to another party without using cash or a personal check. It’s often used when the recipient wants a fast, guaranteed form of payment, or when you don’t have access to a bank account. You pay for the money order up front, which ensures the funds are there when the recipient cashes it.

Read on for a closer look at how money orders work, their pros and cons, and how they compare to other forms of payment like a personal check, cashier’s check, or wire transfer.

What Is a Money Order?

A money order is a paper document that guarantees the recipient will receive a specific amount of money, generally up to $1,000. Because it’s not tied to a bank account, a money order can be a safer option than a personal check when paying someone you don’t know well. It can also be a good payment option if you don’t have a bank account, since you don’t need to have access to a checking account to get a money order or cash one.

You can buy a money order for a small service fee from many banking institutions and other locations. To fill out a money order, you typically need to provide the recipient’s name and address, as well as your own name and address. You’ll have an option to add notes to the memo field (such as what the payment is for or an order/account number that identifies the bill being paid), and will need to sign the front of the money order.

Typically, you can pay for a money order with cash or a debit card. In some cases, you may be able to buy a money order with a credit card, but keep in mind this may count as a cash advance, which typically comes with interest and fees. However you pay, you’ll need enough money to cover the value of the money order plus any issuing fees.

You’ll get a receipt for the money order that has a tracking number you can use to verify that the money order got to the recipient. It’s wise to keep this in a safe place until the money order has cleared. Should the money order get lost or stolen, you’ll need the tracking number to replace it.

Where to Get a Money Order

Many banks and credit unions offer money orders, though you generally need to be an existing customer to purchase one. These institutions usually charge a fee of around $5, but the fee may be waived for premium account holders.

You can also purchase a money order at some large retailers (like Walmart), convenience stores, grocery stores, drug stores, stores that offer check cashing or money services (like MoneyGram or Western Union), and at a U.S. Post Office. Fees vary by issuer. Walmart tends to have the lowest fees — up to a maximum of $1. Postal Service fees, at the time of publication, are $2.35 for a money order of up to $500, and $3.40 for one between $500 to $1,000.

Advantages of a Money Order

Money orders can be a useful financial tool for several reasons:

•  Security: A money order is safer than cash, since it can only be used by its intended recipient. And since it’s prepaid, there’s no risk that a money order could bounce due to insufficient funds. This form of payment also offers privacy, since it doesn’t include sensitive personal information like your bank account and routing number.

•  Accessibility: Money orders are available to anyone, including those who are unbanked. You don’t need a bank account or credit history to use this form of payment — you can use cash or a prepaid debit card to buy a money order. Money orders also offer flexibility for recipients, since you can cash them at multiple locations (such as your bank or a check-cashing store).

•  International use: Some money orders can be sent internationally, making them a simple and secure way to send money overseas. Just keep in mind that not all providers offer international money orders. And as of October 1, 2024, the United States Postal Service no longer sells international money orders.

•  Paper trail: Each money order includes a receipt and tracking number. This makes it easy to trace the transaction if the recipient claims they did not receive the money or if it gets lost in the mail. Just keep in mind that you’ll likely need to pay a hefty processing fee to replace a lost or stolen money order.

Disadvantages of a Money Order

While money orders can be useful, they are not without their drawbacks:

•  Fees: While the fees are small, they can add up — especially if you need to send multiple money orders. If you receive a money order, you also typically need to pay a fee for cashing a money order somewhere other than your own bank or credit union.

•  Payment limits: Domestic money orders typically cap out at $1,000. If you need to send more, you’ll need to buy multiple money orders and pay separate fees for each one.

•  Inconvenience: You must travel to a physical location and speak with someone in person to purchase a money order, then deliver or mail it to the recipient, all of which can be time-consuming. You can’t complete the transaction online.

•  Use in scams: Money orders can potentially be forged or used in banking scams. If you deposit a money order from someone you don’t know in the bank, it’s a good idea to wait until the money clears before spending it. Also be wary of sending a money order to an unknown party — once it’s cashed, it can be difficult (if not impossible) to get your money back, even if it was due to a scam or fraud.

Recommended: How to Deposit a Check

Alternatives to Money Orders

Depending on your needs, you might consider other options for sending and receiving money:

•  Cashier’s check: Issued by banks, a cashier’s check is backed by the institution’s own funds and generally has no upper limit. This form of payment can work well for larger dollar amounts, preventing the need for buying multiple money orders, and some payees specifically request them. However, you generally need to have an account at the issuing bank, and fees tend to be higher than those for money orders.

•  Personal checks: If both parties have bank accounts and trust each other, a personal check can be a simple and free way to make a payment. They’re easy to track and don’t incur fees. However, they can bounce if the payer does not have sufficient funds in their account.

•  Wire transfers: A wire transfer is a way to electronically move funds from one person’s bank account to another person’s account, often within the same day. Wire transfers can be a good way to send large sums of money quickly, but are generally more expensive than money orders.

•  Mobile payment apps: Apps like Venmo and PayPal offer instant, convenient ways to send money digitally. These can be ideal for personal use but may not be accepted in formal transactions or by certain businesses.

•  Bank transfers: You can make a payment directly from your bank account to a merchant’s account through online banking. This can be a good choice for regular payments, such as rent or utility bills. It’s free and fast, but does require both parties to have bank accounts.

The Takeaway

Money orders can be a useful payment method when you need to send money securely. They don’t include your bank account number and can’t be rejected for insufficient funds. And unlike cash, only the recipient can use it.

But money orders typically come with caps and fees. They also require a fair amount of legwork to buy and send. For large or frequent transactions, a cashier’s check, online payment, or payment app may be more efficient and cost-effective.

SoFi Checking and Savings is offered through SoFi Bank, N.A. Member FDIC. The SoFi® Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.

Annual percentage yield (APY) is variable and subject to change at any time. Rates are current as of 12/23/25. There is no minimum balance requirement. Fees may reduce earnings. Additional rates and information can be found at https://www.sofi.com/legal/banking-rate-sheet

Eligible Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Eligible Direct Deposit”) via the Automated Clearing House (“ACH”) Network every 31 calendar days.

Although we do our best to recognize all Eligible Direct Deposits, a small number of employers, payroll providers, benefits providers, or government agencies do not designate payments as direct deposit. To ensure you're earning the APY for account holders with Eligible Direct Deposit, we encourage you to check your APY Details page the day after your Eligible Direct Deposit posts to your SoFi account. If your APY is not showing as the APY for account holders with Eligible Direct Deposit, contact us at 855-456-7634 with the details of your Eligible Direct Deposit. As long as SoFi Bank can validate those details, you will start earning the APY for account holders with Eligible Direct Deposit from the date you contact SoFi for the next 31 calendar days. You will also be eligible for the APY for account holders with Eligible Direct Deposit on future Eligible Direct Deposits, as long as SoFi Bank can validate them.

Deposits that are not from an employer, payroll, or benefits provider or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, Wise, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Eligible Direct Deposit activity. There is no minimum Eligible Direct Deposit amount required to qualify for the stated interest rate. SoFi Bank shall, in its sole discretion, assess each account holder's Eligible Direct Deposit activity to determine the applicability of rates and may request additional documentation for verification of eligibility.

See additional details at https://www.sofi.com/legal/banking-rate-sheet.
*Awards or rankings from NerdWallet are not indicative of future success or results. This award and its ratings are independently determined and awarded by their respective publications.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

We do not charge any account, service or maintenance fees for SoFi Checking and Savings. We do charge a transaction fee to process each outgoing wire transfer. SoFi does not charge a fee for incoming wire transfers, however the sending bank may charge a fee. Our fee policy is subject to change at any time. See the SoFi Bank Fee Sheet for details at sofi.com/legal/banking-fees/.
Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

SOBNK-Q225-030

Investment funds are financial tools that effectively allow investors to pool their resources to buy into a collection of securities. It’s relatively common and easy for beginning investors to dip their toes in the market with investment funds for a variety of reasons.

But there are many types of investment funds, and the purported benefits of a specific fund may not be the right choice for each investor. With that in mind, it’s generally a good idea to have a deeper understanding of investment funds before buying into one.

What Is an Investment Fund?

Broadly speaking, an investment fund is a collection of funds from different people that is used to buy financial securities. Investors get the advantages of investing as a group (purchasing power) and own a portion, or percentage of their investments equal to the money they have contributed.

There are different types of investment funds, including mutual funds, exchange-traded funds (ETFs), and hedge funds. Typically, these funds are managed by a professional investment manager who allocates investors’ money based on the type of fund and the fund’s goal. For this service, investors are generally charged a small fee that is a percentage of their investment amount.

What Is a Mutual Fund?

Mutual funds are a popular type of investment fund for a reason: they are an easy way to purchase diversified assets — from stocks and bonds to short-term debt — in one transaction.

One of the fundamental ideas that led to the creation of mutual funds was to provide individual investors with access to investments that might be more difficult to obtain or manage on their own. A retail investor with $1,000 probably wouldn’t be able to effectively recreate a portfolio that tracks the S&P 500, let alone rebalance it quarterly.

But thanks to the creation of mutual funds, investors can pool all of their money together into a collective fund to invest in the same markets by choosing from custom-packaged funds with specific focuses and inexpensive share prices.

Different Types of Mutual Funds

There are a number of different types of mutual funds, each of which offer something distinct to the investor.

Equity Funds

Also known as stock funds, equity funds are a type of mutual fund that invests in a specific asset class, principally in stocks. Equity fund managers seek to outperform the S&P 500 benchmark by actively investing in growth stocks and undervalued companies that may provide higher returns over a period of time than the fund’s benchmark.

Equity funds have higher potential returns but are also subject to higher volatility as well. It’s common for equity funds to be actively managed and thus typically charge higher operating fees. Funds with higher stock allocations are more popular with younger investors as they allow for growth potential over time.

While equity is a specific asset investment by itself, some mutual funds focus on more precise criteria:

Fund Size (Market Cap)

Some funds only include companies with a defined market cap (market value). Different tiers of company sizes can perform differently in different economic conditions, and companies can be viewed as more or less risky based on their market cap. Fund sizes are categorized by the following:

•   Large-cap (More than $10 billion)

•   Mid-cap ($2 billion to $10 billion)

•   Small-cap ($300 million to $2 billion)

Industry/Sector

These are funds that focus specifically on a single industry or sector, such as technology, health care, energy, travel, and more. Owning shares in different sector mutual funds provides portfolio diversity and can potentially enhance returns if a particular industry experiences a tailwind.

Growth vs Value

Some funds differ in their investment style, focusing on either value or growth. Growth stocks are expected to provide outsized returns, though these tend to be higher risk, whereas value stocks are considered to be undervalued.

International/Emerging Markets

Domestic stocks are not the only equity investment options, as some funds focus exclusively on international and emerging markets. International and emerging market funds provide geographic diversity — exposure to companies operating in different countries and countries with growing markets.

Bond Funds

Like stock mutual funds, bond funds are pools of investor funds that are invested in short- or -long-term bonds from issuers such as the U.S. government, government agencies, corporations, and other specialized securities. Bond funds are a common type of fixed-income mutual funds where investors are paid a fixed amount on their initial investment.

Seeing as how bonds are frequently thought of as a less-risky investment than stocks and offer less growth, bond funds are popular among investors who are looking to preserve their wealth.

Index Funds

This type of fund is constructed to track or match the makeup and performance of a financial market index such as the S&P 500. They provide broad market exposure, low operating expenses, and relatively low portfolio turnover. Unlike equity funds, an index fund’s holdings only change when the underlying index does.

Index fund investing has exploded in popularity in recent years due to its low costs, passive approach, and abundance of options to pick from. Investors may choose from a number of indices that focus on different sectors such as the S&P 500 (financial and consumer), Nasdaq 100 (technology), Russell 2000 (small-cap), and international indices.

Balanced Funds

Also known as asset allocation funds, these hybrid funds are a combination of investments in equity and fixed-income with a fixed ratio, such as 80% stocks and 20% bonds. Balanced funds offer diversification by spreading funds across different asset classes and consequently trade some growth potential in an attempt to mitigate some risk.

One example of a balanced fund is a target-date retirement fund, which automatically rebalances the investments from higher-risk stocks to lower-risk bonds as the fund approaches the target retirement date.

Money Market Fund

This low-risk, fixed-income mutual fund invests in short-term, high-quality debt from federal, state, or local governments, or U.S. corporations. Assets commonly held by money market funds include U.S. Treasuries and Certificates of Deposit. These funds are usually among the lowest-risk types of investments.

Alternative Funds

For those seeking portfolio diversity beyond traditional stocks and bonds, it may be worth considering alternative investment funds. Alternative funds focus on other specific markets, such as real estate, commodities, private equity, or others. They tend to be higher risk in exchange for the potential to offer higher returns.

These asset classes generally make up a small percentage of one’s portfolio, if at all, and serve as a hedge to heavier-weighted allocations to traditional sectors. Rather than investing in companies of a particular index or market cap, alternative funds may be composed of shares of natural gas drilling companies, real estate investment trusts (REITs), intellectual property rights, or more.

Benefits of Investing in Mutual Funds

While no two funds are the same, mutual funds are a popular choice for investors of all types for a variety of reasons.

Diversification

Mutual funds serve as a sort of investment basket that contains many different assets, some with the same general focus and others with multiple focuses. Rather than being all-in on one particular investment, mutual funds offer diversity across multiple investments.

This allows investors to cast a wider net and benefit when one or multiple of their basket investments performs well. Conversely, when one investment in a mutual fund does poorly, the loss may be mitigated by also having other investments that are performing comparatively well. Some types of funds offer greater diversification across different asset classes, such as stocks and bonds.

Performance

Mutual funds that aim to track indices or focus on growth stocks typically yield similar market performance compared to the benchmark index. This is more or less the same goal of a buy-and-hold strategy, as fund performance often, but not always, mirrors the tracked index.

Low Maintenance

Mutual funds are relatively easy to use and require little to no maintenance. They allow investing in multiple asset classes through one investment vehicle without having the investor sift through and make individual decisions. All of these decisions are usually provided by an active fund manager whose responsibility is to provide profitable returns for investors based on the fund’s general focus or target.

Mutual funds also provide a degree of functionality. One convenient feature is the ability to set a passive monthly investment amount and to automatically reinvest dividends. Many mutual funds pay investors dividends on an annual, quarterly, or even monthly basis. Dividends are calculated based on the underlying companies’ earnings and distributed to the fund, which then passes them along to fund investors. Another feature of mutual funds is the ability to reinvest dividends, thus compounding both mutual fund holdings and dividends in perpetuity.

Liquid

Mutual funds are transacted frequently. Investors are able to easily buy or redeem mutual fund shares daily at the market open. Shares in funds tend to be relatively affordable as they typically have a low net asset value (NAV), allowing even novice investors to buy shares with a low starting amount. Compare this to ETFs which can be transacted repeatedly at any time during market hours, but the price can rise to seemingly out-of-reach levels for a beginner.

Active Management

Mutual funds are usually actively managed by a professional fund manager who’s responsible for operating the fund, whether it be to allocate investor money, rebalance the fund’s investments, or distribute dividends to investors.

While mutual funds tend to have relatively low fees, investors are subject to an annual fee, also known as an expense ratio, that is calculated as a percentage of each individual’s holdings in the fund and automatically paid to the fund manager for their services. Fund fees vary, so in some cases it may be helpful to compare fees before investing.

Can I Lose Money in a Mutual Fund?

With investing, there is no such thing as a sure thing. So, yes, you can lose money in a mutual fund. It is possible to lose all of your money in a mutual fund if the securities in the fund drop in value.

As always, it’s prudent to research exactly what’s contained in a particular mutual fund before investing any capital. Ultimately, it’s every investor’s responsibility to determine their own risk tolerance and investing strategy that meets their personal needs.

The Takeaway

Investment funds are a practical and beginner-friendly way to start investing in financial markets. Even with beginner knowledge concerning what is a mutual investment fund, mutual funds have the propensity to provide a hands-off and potentially low-cost way to start building wealth. But again, your mileage may vary, as not all funds are alike.

Invest in what matters most to you with SoFi Active Invest. In a self-directed account provided by SoFi Securities, you can trade stocks, exchange-traded funds (ETFs), mutual funds, alternative funds, options, and more — all while paying $0 commission on every trade. Other fees may apply. Whether you want to trade after-hours or manage your portfolio using real-time stock insights and analyst ratings, you can invest your way in SoFi's easy-to-use mobile app.