Mutual Funds Meaning and Definition

Posted by Grace under Investing on August 21, 2015

Want to know mutual funds meaning and definition Many of InvestmentTotal.com Blog readers are asking about mutual funds. What is really a mutual fund? How does mutual fund work? Today, our topic is about mutual fund. Okay, I started investing in mutual fund 2 years ago. I invest in the top performing mutual funds and decided to invest lump sum (one time investing large amount of money).

Mutual Funds Meaning and Definition

In our own definition, a mutual fund is a fund of many investors investing by a one person – the fund manager. Investors has different amount of invested capital. Some may invest millions, thousand and few hundreds of dollars.

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Assuming a mutual fund type AZX has 2,500 investors investing $1,000 each. That means the fund AZX has a total of $2,500,000. In investing the big the funds, the higher the profits an investor can get.

Benefits of Mutual Fund

Diversification is one of the great benefits of mutual fund investing. How? Example, in mutual fund equity, the funds are invested in different company stocks. Not just a single stock. It means even if an investor has only $500, his money is still well diversified. The more we diversified our investment capital, the more we put our money in less risk.

Mutual Fund Type to Invest In

There are different types of mutual funds, there is the index fund, equity fund, money market fund, bond fund and dollar funds. Choose which type of funds do you want your money to invest in. Know your risk appetite and make sure invest in a mutual fund type based on your risk profile.Example, if you are an aggressive investor, you may want to invest in index fund or equity type fund.

How to Invest in Mutual Fund? In our next topic, we’ll talk about investing in mutual fund. So, stay tuned to Return-On-Investment.org and learn financial literacy for free. Please do not forget to share your comment! Thank you for reading!

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