Top 12 Must-Know Different Types of Investments

2. Mutual Funds

Mutual funds pool money from multiple investors to invest in a diversified portfolio of stocks, bonds, or other assets. A professional fund manager oversees the investments to meet specific financial goals.

Pros:

  • Diversification reduces investment risk
  • Professionally managed, so less effort required by individual investors
  • Accessible to smaller investors
  • Wide range of mutual funds to suit different risk profiles

Cons:

  • Management fees can lower overall returns
  • Lack of control over individual holdings
  • Potential for underperformance due to poor management
  • Tax implications from fund distributions

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