Introduction to Mutual Funds

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Mutual funds are very popular investments for many reasons. Find out how they work and what some of the major types are.

What you will learn

  • What Is a Mutual Fund and How Does It Work?
  • Buying and Redeeming Mutual Funds
  • Mutual Fund Expenses
  • Mutual Fund Income and Distributions
  • Stock Mutual Funds
  • Bond Mutual Funds
  • Money Market Mutual Funds
  • Hybrid Mutual Funds

What do you know?

Introduction to Mutual Funds

Mutual funds are among the most popular investment vehicles. There are over 15,000 of them holding close to $9 trillion. In fact, there are more different mutual funds available to investors than there are different publicly traded corporations offering common stock.

Many people buy mutual funds because of their competitive returns. Others like them because they are easy to buy and sell or redeem. Still other investors like the fact that investment risk is diversified over many companies held in a mutual fund portfolio.

Mutual funds also provide professional portfolio management. Mutual funds can be chosen on the basis of fund investment objectives that match the individual investor’s objectives. However, there is a cost for the management and convenience of mutual funds, which is borne by the portfolio and paid in the form of various fees and charges.

Nevertheless, mutual funds are a convenient and potentially rewarding way for investors of all levels of sophistication to invest.