Ever wondered what is a mutual fund? A mutual fund is a pool of money run by a professional or group of professionals called the "investment adviser."
A mutual fund is a company that pools money from many investors and invests the money in stocks, bonds, short-term money-market instruments, other securities or assets, or some combination of these investments. The combined holdings the mutual fund owns are known as its portfolio. Each share represents an investor's proportionate ownership of the fund's holdings and the income those holdings generate.
Because it is sometimes hard for investors to become experts on various businesses for example, what are the best steel, automobile, or telephone companies, investors often depend on professionals who are trained to investigate companies and recommend companies that are likely to succeed.
In a managed mutual fund, after investigating the prospects of many companies, the fund's investment adviser will pick the stocks or bonds of companies and put them into a fund. Investors can buy shares of the fund, and their shares rise or fall in value as the values of the stocks and bonds in the fund rise and fall.
Investors may typically pay a fee when they buy or sell their shares in the fund, and those fees in part pay the salaries and expenses of the professionals who manage the fund.
Even small fees can and do add up and eat into a significant chunk of the returns a mutual fund is likely to produce, so you need to look carefully at how much a fund costs and think about how much it will cost you over the amount of time you plan to own its shares. If two funds are similar in every way except that one charges a higher fee than the other, you'll make more money by choosing the fund with the lower annual costs.
Past performance is not a reliable indicator of future performance. So don't be dazzled by last year's high returns. But past performance can help you assess a fund's volatility over time.
Making any sort of investment involved a certain amount of risk so it is always wise to seek the advice of a professional before making any decisions.
You may freely reprint this article provided the author's biography remains intact:
John Mussi is the founder of Direct Online Loans who help UK homeowners find the best available loans via the http://www.directonlineloans.co.uk website.
Chicago limo Skokie ..Both the stock market and oil prices rallied recently, which... Read More
Every day I see in the financial section of newspapers... Read More
No, this is not a symbol for some Latin number.... Read More
Every successful trader has a winning system. There are of... Read More
I have a 2-car garage. There are nice shelves on... Read More
What does it take to be a stock trader? It... Read More
The big bad bear is stirring again. So far he... Read More
∙ Make every investment in the stock market a long-term... Read More
As I have said many times before in this column... Read More
So you're started trading, you bought some positions with your... Read More
When you stand on the ocean shore and watch the... Read More
One of the great truisms of Wall Street is "Don't... Read More
(1) CHK stock price $16.74, NAV $32.5CHK is my favorite... Read More
Every broker and financial planner will tell you that you... Read More
Very few people, even professionals, have heard of the Dalbar... Read More
In my opinion, due to the volatility of stock market... Read More
The Law of Chaos is the theory of random unpredictable... Read More
Everything you invest in has risk so you want to... Read More
During our travel down life's path we come to many... Read More
On Monday, November 25, 2000 Investor's Business Daily listed on... Read More
I feel that an investment strategy in the stock market... Read More
How many times have you said to yourself, "I'd like... Read More
The trading method you employ to approach the stock market... Read More
Congress recently passed another new law that is supposed to... Read More
There are many important things you need to know to... Read More
limo O'Hare Bonfield ..When you invest in the stock market for ever-increasing cash... Read More
Sometime around 1980, can't remember exactly, there was a flight... Read More
Yesterday I received my monthly issue of MONEY magazine. This... Read More
You'd have had to be living on a desert island... Read More
Quick, look out the window. It's raining. No, the sun's... Read More
If you want one.And I don't recommend any broker with... Read More
In 1960 an engineer working for a watch company in... Read More
Unfortunately, most of you who are reading my column are... Read More
Invest in the stock market for the RIGHT reason, using... Read More
An insane person cannot evaluate an insane evaluation system.As you... Read More
Did you run out to buy that duct tape yet?... Read More
The fight continues to rage among traders who use technical... Read More
If you're like many investors who squander those small dividend... Read More
If you were to find that you had some severe... Read More
Before we get into all the good news out there,... Read More
How can you dispel an illusion unless you look directly... Read More
I receive emails from Morningstar. This company provides statistics and... Read More
Its dinnertime and the phone rings. It's Joe Noname with... Read More
Humpty Dumpty had a great fall and all the King's... Read More
If you are fed up with early redemption charges and... Read More
∙ Make every investment in the stock market a long-term... Read More
It has often been said that there is only two... Read More
Time to look back2004 is over, now we are in... Read More
Mutual funds were moderately successful in creating a presence in... Read More
People are always asking me when should I sell my... Read More
Stocks & Mutual Fund |