Canadian Dividend Mutual Fund Income Investing

   Editor's Note: from http://www.buzzle.com/

by : Ramsay Alexander

The stock market can be a scary place to have your money tied up if it is all in one place. This is because if you are storing all of your money in one particular stock and that company fails, then you are likely to lose all of your invested money. Most people are not willing to take this kind of all or nothing approach, and that is why there is something known as a dividend mutual fund.

This dividend mutual fund is something that can be used to spread one's money around the market. Rather than just investing in one particular company, the dividend mutual fund takes your money and pools it with other investor's money. Then, using that pooled money, they invest in a variety of different stocks and other investments. This means that you get a little tiny piece of many different companies. That means that it will be much less likely that you will end up losing all of your money. Even if one of your stocks fails, you have plenty of other ones that can be used to back it up. That safety in investing is one thing that has people running to snatch up this type of investment, but it is not the only thing.

It is also important to remember that the kind of fund we are talking about is not just a mutual fund, but rather it is a dividend mutual fund. This means that the fund aims to buy up stocks that pay dividends. A dividend is a quarterly payment that some companies make to their shareholders for simply being loyal shareholders. They could have selected to use this money for research and development or to grow the company more, but instead they have decided to return some of the money to the people who own the company (shareholders). This is a small monetary bonus that you receive every three months just for continuing to hold the stock, or in this case the mutual fund. One mutual fund that pays dividends is the Investor's Dividend Fund

Studies have found that stocks that pay dividends tend to fare better over the long run than the stocks that do not. This means that you will be getting a second layer of security on your investment. You will know that you are safely diversified, and now you are also being paid dividends. This double safety net of security is something that all investors can look to in uncertain economic times. These types of investments have become very interesting to people in recent years as the market has had more than a little bit of a bump in the road. Make sure that you consider this type of investment along with all other types on investments when you are getting ready to put some of your money away.