Pay As You Go Pension Plan

Featured term of the day

Definition / Meaning of

Stable Value Fund

Categories: Mutual Funds, Retirement and Pension,

1. An investment option typically offered in retirement plans by employers or IRAs that are composed of guaranteed investment contracts, fixed-income funds, or capital-preservation funds. This is a popular investment vehicle for individuals nearing retirement because of stable interest and principle payments on these contracts. The returns from a stable value fund are secure, but can be small compared to other investments. A stable value fund should not be the only investment vehicle in the portfolio of an individual who has a long time until retirement. 2. A type of mutual fund that is regulated by the Department of Labor instead of the securities and exchange commission, which typically oversees mutual funds. Stable value funds are similar to bond funds, but they have insurance against principal losses. Money invested in stable value fund is combined with other cash infusion and used to purchase secure contracts from banks or insurance companies. These contracts include a guaranteed regular rate of return over the course of the contract.