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What Is A Mutual Fund?

“Mutual funds are popular among all income levels. With a mutual fund, we get a diversified basket of stocks managed by a pro.”

- Barbara Stanny, author of
Prince Charming Isn’t Coming:
How Women Get Smart About Money

Basically, a mutual fund is an investment held by a bunch of different people. Investors pool their money together and entrust it to a professional money manager who buys and sells securities based on the fund’s objective. A fund may be comprised of stocks, bonds, cash instruments, or any combination thereof.

You purchase “shares” in a mutual fund, just as you would an individual stock. Only a mutual fund is inherently diversified, holding shares in a greater number of securities than any single investor is likely to buy on his or her own. Just as the mutual fund’s shareholders share the costs of buying securities, they also share in the proceeds from the fund’s growth.

Mutual Fund Advantages:

  • Professional money management that handles day-to-day decisions.

  • Diversification of underlying securities.

  • Convenience of not having to research securities or place trades yourself.

  • Liquidity to cash out your investment at any time without having to find a buyer.

 What is a Mutual Fund?

 Types of Mutual Funds

 

 How to Research Mutual Funds

 When to Buy and Sell

 

 Costs Associated with Mutual Funds

 Tax Issues

 

 

 

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