Investors sometimes favor mutual funds over other investments, perhaps because they hold potential of a higher rate of return than say, CDs. And with a mutual fund, such as a stock fund, your risk - the risk of a company going bankrupt, resulting in the loss of investor's funds - is more spread out because you own a piece of a lot of companies instead of a portion of a single enterprise. A mutual fund manager may invest the fund's money in either a variety of industries or several companies in the same industry. Or your funds may be invested in a money market mutual fund, which may invest in short term CDs or securities such as Treasury bills and government or corporate bonds. Do not confuse a money market deposit account (described in What is Insured) which earns interest in an amount determined by, and paid by, the financial institution where your funds are deposited.

You can - and should - obtain definitive information about any mutual fund before investing in it by reading a prospectus, which is available at the bank or brokerage where you plan to do business. The key points to remember when you contemplate purchasing mutual funds, stocks, bonds, or other investment products, whether at a bank or elsewhere are: Funds so invested are not insured by the FDIC - or any other agency of the federal government, are not a bank deposit, are not guaranteed by the bank, and may lose value.

Securities you own, including mutual funds, that are held for your account by a broker, or a bank's brokerage subsidiary, are protected against physical loss by the Securities Investor Protection Corporation (SIPC, pronounced si-pick), a non-government entity funded by assessments paid by members. SIPC protects customer accounts held by its members up to $500,000, including up to $100,000 in cash, if a member brokerage or bank brokerage subsidiary fails.