2006-06-24 07:31:01 · 4 answers · asked by charles_stewart_2002 1 in Business & Finance ➔ Investing
Mutual funds - take the investments of many investors collectively - invests them, and manages that investment. Theoretically, the fund manager knows how to manage investments to make them grow.
No investment is completely free of risk. But if you are in a reliable fund, with a competent manager - your risk should be minimal.
2006-06-24 07:57:10 · answer #1 · answered by me 7 · 0⤊ 0⤋
A mutual fund pools investors cash to invest in a bunch of securities. These securities are mainly stocks and bonds. There are hundreds if not thousands of stock mutual funds and bond mutual funds to choose from. There are even "balanced" mutual funds that hold both bonds and stocks.
The risk of those mutual funds reflect the risk of their underlying securities. Stocks are more risky than bonds. So, a stock fund is more risky than a balanced fund which in turn is more risky than a bond fund.
The beauty of mutual funds is that they allow you to diversify some of your risk. It is a lot more risky to invest in one single stock than to diversify your stock holdings among 200 different stocks. For an individual investor it would not be practical to do so. And, that's where mutual funds come in.
If you need clarification, contact me through "Answer" and I'll modify my answer accordingly.
2006-06-28 06:32:08 · answer #2 · answered by Gaetan 3 · 0⤊ 0⤋
A 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.
2006-06-24 07:35:07 · answer #3 · answered by marceldev29 4 · 0⤊ 0⤋
See answer above.
Yes, there is a risk.
2006-06-24 07:54:37 · answer #4 · answered by Anonymous · 0⤊ 0⤋