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A mutual fund is an aggregation of money from a group of investors. A professional mutual fund manager invests the group's money across a variety of stocks, bonds and other financial products. The fund manager decides the optimum timing for buying and selling the securities that comprise the fund. The advantage of mutual funds to the individual investor is the inherent diversification of the pool of investments. If you are not sure which stocks to pick, a mutual fund is a safer bet as a professional does the picking for you. Typically, though, you will pay a small fee for that service. This is call the "load". Additionally, "index funds" are mutual funds that just invest in the S&P 500 stocks or other indices. These are generally "no load" funds, since there is not a professional advisor making discretionary decisions.
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