Mutual Funds

A mutual fund is simply a financial intermediary that allows a group of investors to pool their money together with a predetermined investment objective. The mutual fund will have a fund manager who is responsible for investing the pooled money into specific securities (usually stocks or bonds). Mutual funds are one of the best investments ever created because they are very cost efficient and very easy to invest in (you don’t have to figure out which stocks or bonds to buy).

“Price is what you pay; value is what you get.”

–Warren Buffet

Advantages of Mutual Fund

Professional Management:

A mutual fund is a relatively inexpensive way for a small investor to get a full-time manager to make and monitor investments.

Diversification:

By owning shares in a mutual fund instead of owning individual stocks or bonds, your risk is spread out.

Economies of Scale:

Because a mutual fund buys and sells large amounts of securities at a time, its transaction costs are lower than you as an individual would pay.

Liquidity:

Just like an individual stock, a mutual fund allows you to request that your shares be converted into cash at any time.

Simplicity:

Buying a mutual fund is easy! Most Companies have their own line of mutual funds, and the minimum investment is small.

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