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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