What Are Stock Funds? - Domestic Stock Funds - Fidelity
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Clicking a link will open a new window. Domestic stock funds typically own many individual stocks across different industries, which can reduce the chances that the performance of a single stock or a single industry can negatively impact the performance of the entire portfolio. Certain types of domestic stock funds, such as blended funds, are also diversified across different investing styles and different-sized companies. Domestic stock funds can offer exposure to the world's largest, most liquid equity market, which can give investors the ability to own shares in some of the world’s most successful companies. Capital appreciation and income
If you're looking to invest in the long-term health of the US economy, domestic stock funds can offer significant appreciation potential. For those saving for retirement or other similar longer-term goals, this kind of potential growth can play an important role in helping your savings keep pace with inflation. In addition, many domestic stock funds invest in companies that pay regular dividends, which could help generate income. Liquidity and convenience
All mutual funds allow you to buy or sell your fund shares at each day's net asset value. You can also elect to have income from dividends and capital gains distributions automatically reinvested in a fund, which can potentially compound over time and help drive long-term returns, or make additional investments at any time. For most stock funds, the required minimum initial investment may be substantially less than what you would have to pay to build a diversified portfolio of individual stocks. Risks of domestic stock funds
Loss of principal
The performance of each stock fund is determined by the performance of its stock holdings. When stocks go down in price, the value of your investment in the fund will go down in price as well. If you need to sell your fund when stock prices are low, you may lose money on your initial investment. In addition, although mutual funds are by definition diversified investments, diversification can't guarantee a profit, nor can it protect you against a loss. Potential tax consequences
When stock funds either receive dividends or sell stocks that have gone up in value, the money is distributed to shareholders of the fund in the form of a distribution. As a shareholder in the fund, you're responsible for paying taxes on those distributions. In some cases where funds have held on to stocks for long periods of time, you may receive capital gains distributions, and thus be responsible for paying taxes, even in a year when a fund provides negative returns. Next steps to consider
Get fund picks from Fidelity or independent experts Find investment options to meet your goals. Which is right for you? Please enter a valid e-mail address Please enter a valid e-mail address Important legal information about the e-mail you will be sending. By using this service, you agree to input your real e-mail address and only send it to people you know. It is a violation of law in some jurisdictions to falsely identify yourself in an e-mail. All information you provide will be used by Fidelity solely for the purpose of sending the e-mail on your behalf.The subject line of the e-mail you send will be "Fidelity.com: " Your e-mail has been sent. Your e-mail has been sent. Before investing, consider the funds' investment objectives, risks, charges, and expenses. Contact Fidelity for a prospectus or, if available, a summary prospectus containing this information. Read it carefully. Past performance is no guarantee of future results. Stock markets are volatile and can decline significantly in response to adverse issuer, political, regulatory, market, or economic developments. 613090.4.0 Footer
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