Why Invest in Mutual Funds?
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 »
