Friday, 15 January 2010 15:04
Have you ever heard of the term "mutual fund"? Do you know what it is or what you would do with one?
A mutual fund is a group of stocks from many different companies. Mutual funds offer the perfect investing solution for the individual who wants to diversify but does not have the time or desire to research individual companies. To diversify means to purchase different kinds of stocks rather than purchasing all one type of stock.
Mutual funds are controlled by a fund manager. The fund manager selects several different securities and groups them together. Although some stocks in the mutual fund may become less valuable over time, the fund manager tries to put together a group of securities that will become more valuable overall. Mutual funds are typically less risky than the stock of an individual company because the mutual fund is made up of several securities.
Would you ever use a mutual fund to invest your money? Why or why not?
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