A Mutual Fund is an investment security type that enables investors to pool their money together into one professionally managed investment. Mutual Funds can invest in stocks, bonds, cash and/or other assets. Mutual Funds are a popular choice among investors because they generally offer the following features:
- Professional Management. The Fund Managers do the research for you, select the securities and monitor the performance.
- Diversification or “Don’t put all your eggs in one basket.” Mutual Funds typically invest in a range of companies and industries. This helps to lower your risk if one company fails.
- Affordability. Most Mutual Funds set a relatively low dollar amount for initial investment and subsequent purchases.
- Liquidity. Mutual Fund investors can easily redeem their shares at any time, for the current Net Asset Value (NAV).