Mutual Funds & How They Work

1. What is a Mutual Fund?


A mutual fund is a large pool of money put together by contributions of individual investors, companies, and other organizations. Usually, a fund manager is in place to oversee and invest the cash of the investor contributions.

The goal of the fund manager will depend on the type of fund, whether it be a fixed-income fund manager, in which case he will seek the highest yield at the lowest risk.

A long-term growth manager has the responsibility of beating the Dow Jones Industrial Average or the S & P 500 in a fiscal year, which is a rare feat (few funds ever achieve this.) Either way, an eagle eye is needed to monitor stocks and bonds in the fund’s portfolio.

This provides you, the investor, with more peace of mind of informed investing without the stress of stock analysis and calculation of financial ratios. Leave it to the experts!