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Chapter 10. Everything You Need to Know ... > What Is “Risk”? - Pg. 103

Everything You Need to Know About Investing Your 401(k) Money Investment Objective Income Growth Cash Bonds X X Stocks 103 Remember that investing doesn't have to be an all-or-nothing decision. The trick is developing a balanced approach to reaching your goals, like determining a mix of investments within your 401(k) that makes the most sense for you, given your target rate of return and the type of investor you are. Terms to Know Mutual funds (MF) are portfolios of individual securities. The type of securities purchased depends upon the fund's objective. There are safety-oriented MFs (money markets), fixed-income MFs (bond funds), and growth MFs (stock funds). The manager buys and sells securities to meet the fund's objectives. Investors buy shares in the fund, not the individual securities the fund owns. Investors share in the gains and losses of MFs. We'll talk more about determining your optimal investment strategy in Chapter 14, "Betting on the Right Horse," but right know let's turn our attention and talk about risk --what it is, and what types there are.