Maybe some of you heard about mutual fund, but do you really understand about it? Let’s discuss the basic of mutual fund. Mutual fund can be defined as a portfolio of stocks that are managed by a financial pro. The common and most simple concept of the attractiveness of a mutual fund is that when one stock goes down, it will be offset by a stock rising in price to protect one from major loss.
Mutual funds are operated by money managers, who invest the fund’s capital and attempt to produce capital gains and income for the fund’s investors. A mutual fund’s portfolio is structured and maintained to match the investment objectives stated in its prospectus.A mutual fund pools the assets of its investors and invests the money on behalf of those investors.
Mutual funds pay dividends based on the growth or income to the fund. This attribute is used by the retired investor to create an income. The mutual fund will have a fund manager that trades (buys and sells) the fund’s investments in accordance with the fund’s investment objective. There are many benefits when join mutual fund such as :-
1. The high level of professional management is a vital key to profoundly satisfying results mutual funds enjoy in today’s complicated and volatile markets. The fund manager’s goals and interests are tied to your success because their paycheck is based on how well the fund performs rather than on sales commissions.
2.It provided with the immediate benefit of instant diversification and asset allocation without the large amounts of cash needed to create individual portfolios.
3. With most mutual funds, buying and selling shares, changing distribution options, and obtaining information can be accomplished conveniently by telephone, by mail, or online.
4. Quick and Easy Access To Your Money.
5. Instead of buying into a fund, you could technically do all of your own research, trading, and administration. Considering what your time is worth, how much it would cost to research and administer the funds, buying a mutual fund instead is quite a bit cheaper.
Reference :- The Wall Street Journal