A mutual fund is a
company that makes investment decisions for its owners who are known as
shareholders. Think of buying a mutual fund in the same way you would
buy a condominium. You get the benefits of home ownership without having
all of the worries and chores of owning a single home. You are part
owner of the whole building when you own a condo. Similarly, when you
buy shares of a mutual fund, you are part owner of 100’s of different
securities with thousands of owners just like you.
Selecting the companies that are being bought and sold is the job of the
managers of the fund, know as portfolio managers. So, you do not have to
worry about researching the company’s financials, or making ongoing
decisions whether to continue to hold them or sell them.
Mutual funds come in many
varieties. The types of stocks or bonds that the fund can buy determine its
classification. Generally, funds are designed for Growth or Income, or a
combination of both. You can also buy funds that invest in corporations
operating in foreign nations. In fact, there are approximately 12,000
different mutual funds available. It is a good idea to research all
available Mutual Fund information first before buying, or contact an
Investment Advisor to help you figure out which ones are best suited for
http://www.morningstar.com for the best mutual fund information
available for researching mutual funds.