Mutual Fund

Mutual Funds are portfolio of stock market shares and other financial instruments built with funds collected from (usually) small investors whose primary concern is security of investment. These funds are run by government trusts, banks, and now private financial institutions as well. These funds can be OPEN – FUNDED or CLOSED – ENDED.

A mutual fund is just a convenient package or basket for a lot of investments—mainly stocks and bonds—that would be complicated for the typical investor to manage otherwise.

Mutual funds are the way the masses invest in the stock market. They are a cheap, easy and efficient way for people without a lot of money or financial experience to take advantage of stocks and bonds.

There are different kinds of mutual funds to cater to varied investment objectives: Growth Funds, Income Funds, Balanced Funds, and Liquid Assets Funds, also known as Money Market Funds.

One manager (or sometimes a team) manages a pool of millions or even billions of dollars in a mutual fund. That’s much cheaper than all those thousands of investors hiring a broker to manage their money individually.

Mutual funds are all about bulk. Mutual funds allow investors who start with a little bit of money, yet spread their investment around widely. That makes it much less risky than investing in one or two stocks.