Thinking about investing in mutual funds? They can be an effective way to save for important goals like retirement or your child’s education.
What is a Mutual Fund?
A mutual fund is a type of investment fund. An investment fund is a collection of investments, such as stocks, bonds or other funds. Unlike most other types of investment funds, mutual funds are “open-ended,” which means as more people invest, the fund issues new units or shares. A mutual fund typically focuses on specific types of investments. For example, a fund may invest mainly in government bonds, stocks from large companies or stocks from certain countries. Some funds may invest in a mix of stocks and bonds, or other mutual funds.
Why Invest in Mutual Funds?
When you buy a mutual fund, you’re pooling your money with many other investors. This Let’s you invest in a variety of investments for a relatively low cost. Another advantage is that a professional manager makes the decisions about specific investments.
Also, mutual funds are widely available through banks, financial planning firms, brokerage firms, credit unions, trust companies and other investment firms. You can buy or sell funds at any time.