What are mutual funds?

A mutual fund is a company that pools money from many investors and invests that money in securities such as stocks, bonds, and short-term debt. Investors buy shares in mutual funds. Each share represents an investor's stake in the fund and the income it generates.

A mutual fund can offer a variety of investment opportunities, good management and low fees. Both beginners and experienced investors often choose to invest their money in mutual funds because they are considered lower risk compared to investing in a single company. Mutual funds are often chosen for the following features: Professional fund managers do the research for you. They select securities and monitor performance. Mutual funds usually invest in a variety of companies and sectors. This helps to greatly reduce your risk if a company fails. Economically favorable to the investor. Most mutual funds set a relatively low amount for the initial investment and subsequent purchases. Mutual fund investors can easily redeem their shares at any time for the current net asset value plus any redemption fees. Mutual funds generally fall into one of four main categories - money market funds, bond funds, equity funds and target date funds. Money market funds have relatively low risks. Bond funds have higher risks than money market funds because they generally aim for higher returns. Equity funds invest in company stocks. Not all equity funds are the same. Target date funds hold a mix of stocks, bonds and other investments. Over time, this mix gradually changes according to the fund's strategy. Target date funds, sometimes known as lifecycle funds, are designed for individuals with specific retirement dates in mind.   Follow Global Economic Developments on Social Media! Click here to follow Ieconomy official Facebook account! Click here to follow Ieconomy official Instagram account! Click here to follow Ieconomy official Twitter account!