mutual funds: what are they?

What are Mutual Funds?

Mutual funds are investments that allow you to pool your money together with other investors to invest in stocks, bonds, or other securities.

Benefits of Mutual Funds?

As an individual investor, it would be difficult to create your own portfolio with thousands of stocks. Instead of picking and researching the stocks yourself, the fund manager will actively manage the fund by researching and choosing the top-performing investment strategies that have the potential to offer high returns.

A portfolio manager's primary goal seeks to outperform an index

Mutual funds typically invest in a range of companies and industries. This helps to lower your risk if one company fails.

Mutual Funds have less risk than buying individual securities because they are a diversified investment.

When you buy into a Mutual Fund, your investment can increase in value in three ways: Dividend payments, Capital gains and Asset Value Increase.

Characteristics of Mutual Funds?

Mutual funds all have an “expense ratio” charged annually to handle the cost of managing them.

Mutual funds allow you to buy or sell your fund shares once a day at the close of the market.

Unlike ETF's, for Mutual Funds you must meet the minimum initial investment amount. Many mutual fund minimums range from 500 to 3,000, though some are in the 100 range and there are a few that have a 0 minimum.