A mutual fund is a collective investment, pooling money from thousands of investors to create a portfolio consisting of bonds, stocks, and other securities. This is done in keeping with an agreement enforced by the company offering mutual funds. Each mutual fund investor gets his or her share of returns from the total funds.

Mutual funds allow investors to make investments ranging from a few hundred to thousands of dollars. They also help investors create a diversified portfolio at low costs when compared to purchasing individual bonds and stocks. Also, mutual funds save you the trouble of tracking multiple investments as this is taken care of by the fund manager.

Stock funds

Stock funds are mutual funds that invest in stocks. There are different types of stock funds, such as index funds, growth funds, value funds and hedge funds. Growth funds invest in stocks of fast growing companies while index funds buy and sell securities that reflect a particular market index. [Read more…]