What Are Mutual Funds?
A mutual fund pools the money of
many investors to invest in a variety of stocks, bonds or other securities.
Each
fund has its own investment objective, with
some funds investing more aggressively and others investing more conservatively.
When you invest money in a mutual fund, you
receive shares of the fund. Each share represents
an interest in the fund’s
portfolio and the value of your mutual fund
shares will rise and fall depending upon the performance of the securities
in the portfolio. While the returns of mutual funds are not guaranteed,
they do offer many advantages, especially
for the inexperienced investor. Mutual funds allow you to invest
in
a variety of industries and investments,
which may be difficult to do individually
without having large amounts of money to invest.
The purpose of this article is to help you
understand how mutual funds work and assist
you in selecting funds to create
a well-balanced portfolio. Topics covered in this section are:
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Basic Money Management
Basic Money Management