In the past few years, more and more people have been putting mutual funds into consideration when thinking of where to invest their hard-earned money and how to effectively handle their finances. What are mutual funds and why are the numbers jumping onto the mutual fund bandwagon increasing?
A mutual fund is also called an “open-ended company†and is one of the three basic types of investment companies. A mutual fund is a type of investment where a company raises money by directly selling shares of the mutual fund to several shareholders and/or investors. The price of a share is the mutual fund’s per share Net Asset Value (NAV) and this fluctuates and is calculated on a daily basis. The investment company then uses the collected money to purchase various types and combinations of assets and securities such as stocks, bonds, and other money market tools. Shareholders of the mutual fund make money by having the income from the different investments divided among them according to the value of their shares. All of the assets of the mutual fund are collectively called its portfolio and is handled by a fund manager or a portfolio manager. Shareholders in the mutual fund are free to give up their shares and may sell them at any time they deem it proper to do so. Read the rest of this entry »
The most common type of mutual fund is Equity Funds. Equity fund consist mainly of investment on stocks. And equities represent corporation ownership. You might wonder how this works, right? Companies raise capital by selling stocks of the corporation, and each share of stock represents a piece of the company. While most mutual funds invest in stocks, fund managers do not just buy stocks offered to them that they find attractive. That is why an equity fund holds numerous carefully chosen stocks. Stocks are selected by the fund manager because he or she believes that these investments works toward the achievement of a fund’s stated objective which can be a long-term growth, capital appreciation, total return, or the combination of the three. Fund manager can also combine the stocks with bonds to create an investment that offers both income and growth. Read the rest of this entry »
Out of almost ten thousand mutual funds that are available in the market, where does one begin to choose a mutual fund to invest in?
It is sorely tempting to choose the mutual funds with the fanciest advertisements. They try to dazzle you with stellar percentages of their past performance and try to impress you with the accolades they have received from self-important publications. The truth is, past performance in the money market is not a trustworthy indicator of the future and the people who make the list of the best mutual funds crown a different top ten year after year. Read the rest of this entry »
Mutual funds is very simple, money investors pools their money and invests it in stocks, bonds, short-term money market instruments, and/or other forms of securities. Fund’s investment returns are proportionately shared by the investors. The investment returns are generated from the income paid on the securities, which can be dividends or interest, and capital gains or losses from sales of securities.
A portfolio manager or investment advisor of the mutual fund directs the funds investments according to the fund’s objective which can be a long-term growth, stability of principal or high current income. Depending on the fund’s objectives, investments can be on stocks, cash investments, bonds or a combination of these four assets. Read the rest of this entry »
Nowadays, the idea of having a mutual fund is one of the most popular ways to invest your money into stocks, bonds and other money market instruments. This investment scheme works by having different investors allocate their money into a fund wherein a fund manager or portfolio manager will work on trading the fund to attain interest. The manager is also responsible for collecting the dividends or interest earned by that fund. After collecting the dividend, each of the investors will have their share on this dividend depending on the amount of investment that they allocated for the fund.
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