Charles Schwab Mutual funds

What are mutual funds?

Think of mutual funds as a collection of investments. They can include stocks, bonds, and other types of investments. Mutual funds can help you by spreading investments across multiple companies. This is also known as diversification.

Mutual funds are managed by professionals. They can be an easier way to hold a diversified collection of investments without needing to monitor the performance of many individual securities.

How do mutual funds work?

Mutual funds are purchased through a brokerage account. You could also buy them in an IRA.

When you're buying into a fund, you're pooling your money with other investors. You can invest a lump sum or a monthly amount.

Funds vary in their approach to risk. Usually a fund manager will invest and adjust the mix of the fund to keep it on track, so you won't have to.

This means you can invest without having to learn the inner workings of the stock market.

Individual stocks versus mutual funds

Understanding the differences between investing in individual stocks and mutual funds can help you decide what works best for you.

Comparison of individual stocks versus mutual funds
	Individual Stocks	Mutual Funds
Cost	You buy stocks at market value, and their cost may include a commission to buy and sell.	The cost of buy-in depends on the fund. You buy fund shares with a set amount of money or contribute monthly. There's no commission, but there are other fees that vary by fund. Learn more
Diversification	There may be higher risk when you put all your money in one stock. Your gain or loss depends on how that stock performs.	Spreading the risk over multiple securities can potentially lower overall risk.
Maintenance	They require personal management, research and periodic rebalancing as part of your overall portfolio.	Fund managers monitor the market and may adjust the investment mix of the fund, so you don't have to.

Individual stocks
Individual Stocks
CostYou buy stocks at market value, and their cost may include a commission to buy and sell.
DiversificationThere may be higher risk when you put all your money in one stock. Your gain or loss depends on how that stock performs.
MaintenanceThey require personal management, research and periodic rebalancing as part of your overall portfolio.

Mutual Funds
Mutual Funds
CostThe cost of buy-in depends on the fund. You buy fund shares with a set amount of money or contribute monthly. There's no commission, but there are other fees that vary by fund. Learn more
DiversificationSpreading the risk over multiple securities can potentially lower overall risk.
MaintenanceFund managers monitor the market and may adjust the investment mix of the fund, so you don't have to.

Schwab makes it simple to invest in mutual funds.

Our trusted provider, Schwab, has been helping people of all income levels make investments for more than 50 years. Let Schwab help you learn the benefits and considerations of mutual funds.

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At Schwab, you will always get:

Whether you're a new or experienced investor, Schwab has the knowledge and tools to help you reach your goals.

Low-Cost Investing with No Minimums

Pay no trade minimums, no account minimums and $0 online listed equity trades^{See note1}.
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See all your investment accounts in one place.

View your Schwab investments alongside your USAA accounts without leaving usaa.com or our mobile app. Here's how.

Step 1: Add Accounts

Select “Add or Explore” under Investments, search for “Charles Schwab U.S.,” then follow the instructions to connect accounts.
Step 2: Get Account Snapshot

See an overview of your Schwab accounts that you've connected to USAA.
Step 3: Access Accounts

Go straight to schwab.com without an additional logon. It's convenient and secure.

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Simplify your mutual fund search.

Schwab has tools designed to help you find and compare mutual funds to meet your needs and complement your portfolio.

Narrow down thousands of funds to a few.
Compare the funds you think may be right for you.
Select your fund with more confidence.

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Mutual Funds FAQ

What's the difference between a mutual fund and an exchange-traded fund, or ETF?

Mutual funds and ETFs differ by how they're bought and sold. Mutual funds trade once a day, and all investors pay the same price.

ETFs trade like stocks, so investors pay different prices depending on the price of the ETF share at the time of trade.

Another key difference is in management. Both may be actively or passively managed, but mutual funds are usually actively managed while ETFs are usually passively managed.

What costs are associated with mutual funds?

There are three kinds of costs.

The transaction fee is charged by some brokerages whenever you make a trade. A trade happens when you buy or sell shares.
Load is a one-time commission charged when you make trades with some funds. Funds can be described as load funds or no-load funds.
The operating expense ratio, or OER, is a percentage-based fee charged every year to cover expenses. A $10,000 investment with an OER of 0.5% costs about $50 per year. Learn more

How do I choose a mutual fund?

Your financial goals and risk tolerance will help narrow your choices to certain types of funds. Depending on your situation, you may want long-term growth or dividends for income.

Fund fees may play a factor as well depending on your situation. These costs may have a significant impact on long-term growth or your tax obligations.

Some investors want simplicity and convenience and select all-in-one solutions such as retirement target funds and others using their own criteria select funds to complement their portfolio.

Discover more investing resources.

You can invest with more confidence when you brush up on investing basics and get familiar with your options.

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Investors should consider carefully information contained in the prospectus, or if available, the summary prospectus, including investment objectives, risks, charges and expenses. You can request a prospectus by calling 800-435-4000. Please read the prospectus carefully before investing.

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Investment and Insurance Products are:

Not Insured by the FDIC or Any Federal Government Agency
Not a Deposit or Other Obligation of, or Guaranteed by, the Bank
Subject to Investment Risks, Including Possible Loss of the Principal Amount Invested

Investing involves risk, including potential loss of principal.

Past performance is no guarantee of future results.

Note 1 Standard online $0 commission does not apply to over-the-counter (OTC) equities, transaction-fee mutual funds, futures, fixed-income investments, or trades placed directly on a foreign exchange or in the Canadian market. Options trades will be subject to the standard $0.65 per-contract fee. Service charges apply for trades placed through a broker ($25) or by automated phone ($5). Exchange process, ADR, and Stock Borrow fees still apply. See the Charles Schwab Pricing Guide for Individual Investors for full fee and commission schedules.

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The Charles Schwab Corporation provides a full range of brokerage and financial advisory services through its operating subsidiaries. Its broker-dealer subsidiary, Charles Schwab & Co., Inc. (Member SIPC), offers investment services and products, including Schwab brokerage accounts. Access to Electronic Services may be limited or unavailable during periods of peak demand, market volatility, systems upgrade, maintenance, or for other reasons.

Diversification, asset allocation, automatic investing and rebalancing strategies do not ensure a profit and do not protect against losses in declining markets.

Investment returns will fluctuate and are subject to market volatility, so that an investor's shares, when redeemed or sold, may be worth more or less than their original cost. Shares of ETFs are not individually redeemable directly with the ETF. Shares are bought and sold at market price, which may be higher or lower than the net asset value (NAV).

Trades in no load funds available through Mutual Fund OneSource® service [including Schwab Funds], as well as certain other funds, are available without transaction fees. For each of these trade orders placed through a broker, a $25 service charge applies. Schwab's short-term redemption fee of $49.95 will be charged on redemption of funds purchased through Schwab's Mutual Fund OneSource service [and certain other funds with no transaction fee] and held for 90 days or less. Schwab reserves the right to exempt certain funds from this fee, including Schwab Funds®, which may charge a separate redemption fee, and funds that accommodate short-term trading. Funds are also subject to management fees and expenses.

Charles Schwab & Co., Inc. (member SIPC) receives remuneration from fund companies in the Mutual Fund OneSource® service for recordkeeping and shareholder services, and other administrative services. Schwab also may receive remuneration from transaction fee fund companies for certain administrative services.

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Mutual Funds

Diversify your investing with mutual funds.

What are mutual funds?

How do mutual funds work?

Individual stocks versus mutual funds

Schwab makes it simple to invest in mutual funds.

Build a Portfolio

Managed Solutions

At Schwab, you will always get:

Low-Cost Investing with No Minimums

Tools and Research

24/7 Support

See all your investment accounts in one place.

Step 1: Add Accounts

Step 2: Get Account Snapshot

Step 3: Access Accounts

Simplify your mutual fund search.

Mutual Funds FAQ

Discover more investing resources.

Related resources

4 reasons your investor returns may not match the market

Understanding risk tolerance: What it is and why it matters for investors

ETF versus mutual fund: Which is best for my investing portfolio?

Find mutual funds that fit your needs.