Potential benefits of stock funds

Learn about the types of returns and benefits for investors and about kinds of stock funds.

Stock funds tend to have higher risk and in turn offer the potential for a higher return; they fluctuate in price as the economy waxes and wanes. In the long run, investors may find themselves rewarded for putting up with the volatility. That's why mutual funds that invest in the stock market are often attractive to investors who are putting aside money for retirement and other long-term goals.

A share of stock generates a return for investors two ways. First, if the company grows and makes money, then the share price is likely to go up. The increase in share price is known as the capital gain. On top of that, many companies pay out a small amount of profits to shareholders each year. The payment is known as a dividend.

Some stock funds are managed to maximize dividend income, some to maximize the amount of capital gains, and some to get the best mix of both (known as total return). In general, more investment income could mean less risk. Likewise, some stock mutual funds invest in a broad mix of companies, while others may concentrate only on small companies, international companies, or companies in certain sectors such as technology or energy.

All stock funds bear some level of market risk, but they may be a good choice for long-term investors who can tolerate the intermediate ups and downs on the way to their goals.

AP2018/05/0678

Securities distributed by State Farm VP Management Corp.

Securities are not FDIC insured, are not bank guaranteed and are subject to investment risk, including possible loss of principal.

Neither State Farm® nor its agents provide tax or legal advice.

Past performance is no guarantee of future results.

The stocks of small companies are more volatile than the stocks of larger, more established companies.

Foreign investments involve greater risks than U.S. investments, including political and economic risks and the risk of currency fluctuations.


Get a Quote

Select a product to start a quote.


Contact Us

844-373-0003 844-373-0003

Also Important

What is Survivorship Universal Life Insurance?

What is Survivorship Universal Life Insurance?

Survivorship Universal Life Insurance provides money for others after you and your partner pass away.

Potential Benefits of Mutual Fund Investing

Potential Benefits of Mutual Fund Investing

If you have a financial goal you want to meet, investing in mutual funds could be the answer.

Related Articles

Are Your Investments Really Paying Off?

Are Your Investments Really Paying Off?

Compare the rate of return on your investments with our handy calculator.

5 Basic Steps You Can Take to Improve Your Credit Score

5 Basic Steps You Can Take to Improve Your Credit Score

If your credit score has been holding you back, try these suggestions to improve it.

Money Market Deposit Accounts vs. Money Market Funds

Money Market Deposit Accounts vs. Money Market Funds

Distinguish these two separate entities by learning the differences between them.