Mutual Fund

What is a mutual fund?

It is a professionally managed groups of assets. The assets can be of many types - stocks, bonds, money markets, etc. Investors put money into the fund and the managers pool the investor funds together for the investments.

For example, lets say I want my money managed in a way that favors a specific type of stocks, but I don't want to actually go through the effort of researching and buying those stocks. I could put my money in a mutual fund that specialized in buying those types of stocks.

It is likely that I will pay a high price for this service, but it would save me a lot of time and effort. It would also help me to diversify my investments.

They always charge an annual expense ratio for their services. They also sometimes charge a load fee. You should refuse to buy any fund that has a load fee because there are a lot of good funds out there that don't require a load fee. Also, it has been shown that the more fees that a fund charges, the less returns you receive. Thats right. You don't "get what you pay for."

No load funds also make it easy to automatically dollar cost average your money. Automatic dollar cost averaging is an important investor tactic.

Instead of searching for the perfect fund, a wiser course would be to invest in a broad index fund.

return from mutual fund to index funds

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