What is a Mutual Fund?Written by John Mussi
Ever wondered what is a mutual fund? A mutual fund is a pool of money run by a professional or group of professionals called “investment adviser.” A mutual fund is a company that pools money from many investors and invests money in stocks, bonds, short-term money-market instruments, other securities or assets, or some combination of these investments. The combined holdings mutual fund owns are known as its portfolio. Each share represents an investor's proportionate ownership of fund's holdings and income those holdings generate. Because it is sometimes hard for investors to become experts on various businesses for example, what are best steel, automobile, or telephone companies, investors often depend on professionals who are trained to investigate companies and recommend companies that are likely to succeed. In a managed mutual fund, after investigating prospects of many companies, fund's investment adviser will pick stocks or bonds of companies and put them into a fund. Investors can buy shares of fund, and their shares rise or fall in value as values of stocks and bonds in fund rise and fall.
| | Useful Tips on InvestingWritten by John Mussi
Here are some useful tips on investing. When you make an investment, you are giving your money to a company or an enterprise, hoping that it will be successful and pay you back with even more money. Some investments make money, and some don't. You can potentially make money in an investment if: The company performs better than its competitors. Other investors recognize it's a good company, so that when it comes time to sell your investment, others want to buy it. The company makes profits, meaning they make enough money to pay you interest for your bond, or maybe dividends on your stock. You can lose money if: The company's competitors are better than it is. Consumers don't want to buy company's products or services. The company's officers fail at managing business well, they spend too much money, and their expenses are larger than their profits. Other investors that you would need to sell to think company's stock is too expensive given its performance and future outlook.
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