Is it invesment in mutal fund invesment is gain?

investing in bank as fixed deposit is better rather than investing in mutal fund invesment

The general rule in investing is that higher risk gives higher rewards.

Here are your options for investing a smallish (less than $10,000) amount of money:

1. CDs/other bank-based savings. No risk to your principal (if the bank president takes your money and runs off to Bermuda, the deposits are insured and you won't lose anything. This is important to know, since a CD has a maturity date and taking your money out before hand WILL cost you money. I know people who lost money in the 90s during a run on a troubled bank, not because there was any risk to their funds, but because they thought that there was and took money out of CDs and paid a penalty). Current rates are around 5% and are taxed as regular income.

2. T-bills. These are purchased in units of $1000 (you'll actually pay a bit less than $1000 and get $1000 back at maturity). You can open an account at savingsbonds.gov. These are taxed as regular income at the federal level, but are exempt from state and local taxes. If you live in a state with a state income tax, these can be a very good investment. In theory you could lose money, but that would require the US government to default on its debt, something which has never happened (and if it did, it would throw the global economy into such disarray that the money you lost on T-bills would be the least of your worries).

3. Mutual funds. These are bundles of stocks and/or bonds. Things to watch out for are high loads (sales charges when you buy or sell the fund) or expenses (a percentage of the amount you have invested which is taken by the fund managers to cover their expenses). These have the potential for the greatest gains, but they also have the potential to lose everything you've invested. Income is distributed as dividends (which aren't taxed at all) and capital gains (which are taxed at a lower rate than ordinary income). But there's no guarantee of income at all, and because of the accounting rules, you can sometimes be hit with a stated capital gains income even though the share price has gone down (This happened with the Amerindo Technology fund in 1999 which had a capital gains distribution of roughly 50% of the share price even though the stock had been on the decline. Some people who bought in on this fund at its peak effectively lost everything they had put into the fund because of the tax hit combined with the drop in the share price). In general, you shouldn't put money into stocks that you'll need in less than 10 years.

there is a risk if you invest on mutal fund. i lost money on mutal fund before. i would rather leave it in the bank since they interest rate are pretty good. i am getting like 5.15% and no min

All I know is that having fun with my stock dividend checks, this is something that I never saw with my poor performing mutual fund that are invested in some of the same things that I am.

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