What is mutual funds?
Answer:
Your money will be deposited by the fund managers in different shares like shares in power sector, software, steel etc. If the share value grows, your mutual fund value grows.
If you go through the document of the mutual fund, you will understand where they are intending to invest.
the cash you agree to give to your wife after the divorce
Mutual Fund is a form of collective investment that pools money from many investors and invests the money in stocks, bonds, short-term money market instruments, and/or other securities. [1] In a mutual fund, the fund manager trades the fund's underlying securities, realizing capital gains or loss, and collects the dividend or interest income. The investment proceeds are then passed along to the individual investors. The value of a share of the mutual fund, known as the net asset value (NAV), is calculated daily based on the total value of the fund divided by the number of shares purchased by investors.
Legally known as an "open-end company", a mutual fund is one of three basic types of investment companies available in the United States. [2] Outside of the U.S. (with the exception of Canada which follows the US model), mutual fund is a generic term for various types of collective investment. In the UK and western Europe (including offshore jurisdictions) other forms of collective investment are prevalent including unit trusts, Open-Ended Investment Companies (OEICs), SICAVs and unitized insurance funds.
You could get more information from the link below.
You basically give money to a company (ie Fidelity, T Rowe Price, or Vanguard) and they invest the money in stocks and bonds for you. What happens is you along with several different people invest in one particular fund and that company has a representative of that fund that will manage it for you guys. Its kind of like if you and your friends each put in a few dollars per week and bought a few different lottery tickets, if you win you all share the profit because you all put in. Some people may invest more money than you so their profit or loss would be greater than yours.
There are several different objectives for each fund, so which one you invest in really depends on what YOUR objective is. This a great way to start investing and also a great way to diversify your portfolio.
Usually you have to make the initial investment of at least $1000, but T Rowe Price has 3 "spectrum" mutual funds where instead of putting that initial deposit down, you can pay at least $50 per month. That is a great option for people who don't have a lot of money to invest.
I hope this helps. You should check out the first link for a beginners guide to what a mutual fund is. The second one is a link to the T Rowe Price fund I was writing about. Finally, the third one is from Vanguard's website and it lists the pros and cons of mutual funds.
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Survey says....a mutual fund is a group of stocks not a single stock!
It's a pooled investment. You basically hire a professional money manager to invest your money. The mutual funds usually have a stated objective and typically invest in stocks, bonds and cash (equivalents).
Mr Youssef,
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