A mutual fund is a great way to invest in a series of stocks, bonds, and other assets at little to no risk. Find which type of fund is the best for you.
A mutual fund is an open-ended investment fund that gathers money from several investors to create a pool of funds which is then re-invested into stocks, bonds and other assets.
Investors in these funds effectively become shareholders in the fund in proportion to their investment. It is also normal for investors to pay various administrative fees. It is one of the easiest and accessible investment options for people as it gives people an opportunity to invest in a diversified and professionally managed basket of securities at a relatively low cost.
What Are The Types Of Funds You Can Invest In?
There are many types of funds:
- Open-end and closed-end funds
- Actively-managed and index funds
- Stock funds, bond funds, REIT funds, commodity funds, and more.
Target date funds
- Small-cap, mid-cap, and large-cap funds
- Growth funds and value funds.
Being involved in a mutual fund is one of the easiest ways to maintain a healthy mix of investments. However, there also associated costs with being involved in a fund that can affect just how much money you make from your investments. Sophisticated investors may also find that mutual funds offer less control over the timing of gains and distribution of income.